Rating Change #7
Newfield Exploration Company
has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
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Highlights from the ratings report include:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 2161.8% when compared to the same quarter one year ago, falling from $68.00 million to -$1,402.00 million.
- The debt-to-equity ratio of 1.10 is relatively high when compared with the industry average, suggesting a need for better debt level management.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NEWFIELD EXPLORATION CO's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $343.00 million or 17.54% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 41.08%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 2137.25% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Newfield Exploration Company, an independent energy company, engaged in the exploration, development, and production of crude oil, natural gas, and natural gas liquids. It has operations in the Mid-Continent, the Rocky Mountains, and onshore Texas, as well as in Malaysia and China. The company has a P/E ratio of 12.9, below the S&P 500 P/E ratio of 17.7. Newfield has a market cap of $3.69 billion and is part of the basic materials sector and energy industry. Shares are up 1.9% year to date as of the close of trading on Thursday.
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