Magnolia Oil & Gas (NYSE:MGY) Shares Gap Down - Should You Sell?

Key Points

• Magnolia Oil & Gas shares gapped down after the company announced a $4.06 billion acquisition of WildFire Energy, a deal aimed at expanding its footprint in the Giddings field and adding future production growth.
• The company also raised its dividend and said its board unanimously approved the transaction, signaling confidence in the strategic benefits of the purchase and its cash-return profile.
• Investors are also reacting to a public stock offering that could dilute existing shareholders and help fund the deal, which has weighed on the stock in the near term.

Magnolia Oil & Gas Corp (NYSE:MGY - Get Free Report) shares gapped down prior to trading on Tuesday . The stock had previously closed at $25.53, but opened at $24.13. Magnolia Oil & Gas shares last traded at $24.6350, with a volume of 11,061,935 shares changing hands.

More Magnolia Oil & Gas News

Here are the key news stories impacting Magnolia Oil & Gas this week:

• Positive Sentiment: Magnolia agreed to buy WildFire Energy for about $4.06 billion, a move that expands its footprint in the Giddings field and could add scale, inventory, and future production growth. Reuters article on WildFire acquisition
• Positive Sentiment: The company also raised its dividend alongside the acquisition news, which may support investor confidence in Magnolia’s cash-return profile. MSN article on acquisition and dividend
• Neutral Sentiment: The board unanimously approved the WildFire transaction, indicating management sees strategic value in the deal. PR Newswire article on sale agreement
• Negative Sentiment: Magnolia launched and priced a public offering of Class A common stock, which can dilute existing shareholders and often weighs on the stock in the near term. Business Wire article on proposed offering
• Negative Sentiment: Market reaction has been mixed, with the stock falling as investors digest the cost of the acquisition and the potential share issuance needed to help fund it. MSN article on stock offering pressure

Wall Street Analysts Forecast Growth

Several analysts have recently weighed in on the stock. Mizuho boosted their price objective on shares of Magnolia Oil & Gas from $33.00 to $35.00 and gave the stock an "outperform" rating in a research report on Wednesday, May 27th. Zacks Research cut Magnolia Oil & Gas from a "strong-buy" rating to a "hold" rating in a research report on Tuesday, May 19th. Citigroup reduced their target price on shares of Magnolia Oil & Gas from $35.00 to $32.00 and set a "neutral" rating for the company in a research note on Monday, April 13th. Roth Capital upgraded Magnolia Oil & Gas from a "neutral" rating to a "buy" rating and set a $31.00 price target on the stock in a research note on Monday, June 22nd. Finally, KeyCorp restated an "overweight" rating on shares of Magnolia Oil & Gas in a research report on Monday, June 29th. Eight equities research analysts have rated the stock with a Buy rating and nine have assigned a Hold rating to the company's stock. Based on data from MarketBeat.com, Magnolia Oil & Gas currently has an average rating of "Hold" and an average price target of $31.75.

Magnolia Oil & Gas Trading Down 3.4%

The firm has a market capitalization of $4.56 billion, a PE ratio of 14.35 and a beta of 0.70. The company has a quick ratio of 1.10, a current ratio of 1.10 and a debt-to-equity ratio of 0.19. The business's fifty day moving average price is $27.30 and its 200 day moving average price is $27.36.

Magnolia Oil & Gas (NYSE:MGY - Get Free Report) last released its earnings results on Wednesday, May 6th. The company reported $0.54 earnings per share for the quarter, topping the consensus estimate of $0.51 by $0.03. Magnolia Oil & Gas had a return on equity of 16.28% and a net margin of 24.40%.The firm had revenue of $358.51 million for the quarter, compared to the consensus estimate of $349.89 million. During the same period in the prior year, the business posted $0.54 earnings per share. The firm's revenue for the quarter was up 2.3% compared to the same quarter last year. As a group, analysts expect that Magnolia Oil & Gas Corp will post 2.67 EPS for the current fiscal year.

Magnolia Oil & Gas Dividend Announcement

The firm also recently disclosed a quarterly dividend, which was paid on Monday, June 1st. Stockholders of record on Tuesday, May 12th were given a $0.165 dividend. The ex-dividend date of this dividend was Tuesday, May 12th. This represents a $0.66 annualized dividend and a dividend yield of 2.7%. Magnolia Oil & Gas's dividend payout ratio is presently 38.37%.

Institutional Investors Weigh In On Magnolia Oil & Gas

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the company. Arrowstreet Capital Limited Partnership increased its holdings in Magnolia Oil & Gas by 790.8% during the 1st quarter. Arrowstreet Capital Limited Partnership now owns 6,263,808 shares of the company's stock worth $197,748,000 after purchasing an additional 5,560,619 shares during the last quarter. Epoch Investment Partners Inc. boosted its stake in Magnolia Oil & Gas by 58.7% during the 3rd quarter. Epoch Investment Partners Inc. now owns 4,138,626 shares of the company's stock valued at $98,789,000 after purchasing an additional 1,531,061 shares during the period. HITE Hedge Asset Management LLC boosted its position in shares of Magnolia Oil & Gas by 661.5% during the fourth quarter. HITE Hedge Asset Management LLC now owns 1,454,388 shares of the company's stock worth $31,837,000 after buying an additional 1,263,407 shares during the period. TD Asset Management Inc boosted its position in Magnolia Oil & Gas by 26.6% during the 4th quarter. TD Asset Management Inc now owns 5,671,819 shares of the company's stock worth $124,156,000 after acquiring an additional 1,193,458 shares during the period. Finally, Bank of America Corp DE grew its position in Magnolia Oil & Gas by 20.5% in the 1st quarter. Bank of America Corp DE now owns 3,877,361 shares of the company's stock valued at $122,408,000 after buying an additional 659,012 shares in the last quarter. Hedge funds and other institutional investors own 94.73% of the company's stock.

About Magnolia Oil & Gas

Magnolia Oil & Gas Corp NYSE: MGY is an independent exploration and production company focused on the acquisition, development and optimization of onshore oil and gas assets in South Texas. Headquartered in Houston, the company concentrates its efforts on the Eagle Ford Shale, where it holds significant working interests in key producing counties.

The company's core operations center on horizontal drilling and multi-stage completions designed to extract light crude oil, natural gas and natural gas liquids (NGLs).

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.