Headquartered in Houston, Tex. Camber Energy, Inc. (CEI) operates as an independent oil and natural gas company engaged in acquiring, developing, and selling crude oil, natural gas, and natural gas liquids (NGL) in the Cline shale upper Wolfberry shale in Glasscock County, Texas. CEI achieved meme stock status last year, following its share price rally fuelled by retail investors' interest and discussions on platforms like Reddit and Twitter. However, the gains could not sustain due to its bleak fundamentals and its untimely filing of its financial statements.

The stock has been down 38.6% for the past year. Moreover, its shares have slumped 27.9% over the past month and 9.1% over the past five days to close its last trading session at $0.75. Also, the stock is trading below its 50-day and 200-day moving average, indicating an overall downtrend.

Several law firms have notified investors, filing a class-action lawsuit against the company concerning its acquisition of Viking Energy Group, Inc. and its post-merger combined company. Also, the company has been delaying filing its financial reports, which, if prolonged, might as well be subjected to the NYSE’s delisting procedures. The company’s noncompliance with Exchange’s listing standards is raising investors’ concerns about the stock.

Here’s what could shape CEI’s performance in the near term:

Continued Delinquency

CEI failed to timely file the following reports: (i) Form 10-K for the 9-month transition period ended December 31, 2020; (ii) Form 10-Q for the period ended March 31, 2021; (iii) Form 10-Q for the period ended June 30, 2021; and (iv) Form 10-Q for the period ended September 30, 2021.

The company had earlier shared its plan to file the delayed reports on or before January 14. However, it requested the Exchange to grant another extension. The Exchange has allowed another corridor until February 15, 2022, to file the reports. If the company fails to file the reports within the maximum period of May 20, 2022, Exchange staff is expected to proceed with the delisting procedures as appropriate.

Lawsuits

The Schall Law Firm, a national shareholder rights litigation firm, notified investors that a class action lawsuit had been filed against CEI for the violations of the federal securities laws under the Securities Exchange Act of 1934. The class action alleges that the company made false and misleading statements, overstating the prospects of its acquisition of Viking Energy Group, Inc. and its post-merger business. It also concerns that CEI failed to inform investors that its investment in Viking would add strain to its already tenuous financial stability. CEI acquired a controlling interest in Viking in December 2020 and executed a merger agreement at the beginning of 2021. Several other law firms have also notified investors of class-action lawsuits against the company on the same matter.

Stretched Valuation

In terms of trailing-12-month EV/Sales, CEI is currently trading at 701.18x, 23,874.7% higher than the industry average of 2.92x. Also, its trailing-12-month Price/Sales ratio of 24.10 is 1,475.1% higher than the industry average of 1.53. Also, CEI’s trailing-12-month Price/Book of 4.48x is 150.6% higher than the industry average of 1.79x.

Bleak Financials

CEI’s trailing-12-month revenue came in at $274.16K. However, its trailing-12-month operating income stood at a negative $4.20 million, while its net income came in at a negative $14.24 million. In addition, its trailing-12-month EPS came in at a negative $2.30. Also, its trailing-12-month EBITDA and net operating cash flow amounted to negative $4.18 million and $2.09 million, respectively.

POWR Ratings Reflect This Bleak Prospects

CEI has an overall F rating, translating to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has an F grade for Quality. This is justified as its ROE and ROA of negative 428.63% and 120.71% compare with the industry averages of 2.79% and 1.04%, respectively.

CEI also has an F grade for Value, in sync with its lofty valuation.

Of the 80 stocks in the  Energy - Oil & Gas industry, CEI is ranked the last.

Beyond what I have stated above, you can also view CEI’s grades for Sentiment, Growth, Momentum, and Stability here.

View the top-rated stocks in the Energy - Oil & Gas industry here.

Bottom Line

CEI shares enjoyed a run-up last year due to retail investors' interest. However, the gains were short-lived due to its weak fundamentals and its delay in curing the delinquency concerning the investors. Moreover, the company looks overvalued at its current price, considering its bleak financial strength. Also, considering its negative ROE, the stock could be best avoided now.

How Does Camber Energy, Inc. (CEI) Stack Up Against its Peers?

While CEI has an overall POWR Rating of F, one might want to consider investing in the following Energy - Oil & Gas stocks with an A (Strong Buy) rating: VAALCO Energy, Inc. (EGY) and SilverBow Resources, Inc. (SBOW).

CEI shares were trading at $0.68 per share on Tuesday afternoon, down $0.07 (-9.26%). Year-to-date, CEI has declined -20.00%, versus a -4.01% rise in the benchmark S&P 500 index during the same period.

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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