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TheStreet Open House

Why Penn West Petroleum (PWE) Stock Is Gaining Today

Stock quotes in this article: PWE

NEW YORK (TheStreet) -- Penn West Petroleum (PWE) was gaining 6.4% to $7.84 Wednesday after providing an update on its internal review of accounting practices.

The company said the Audit Committee's review is ongoing, and that it will file its 2014 second quarter financial statements as soon as possible, and no later than October 14.

Penn West confirmed that its reserves volumes and values are not impacted.

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TheStreet Ratings team rates PENN WEST PETROLEUM LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate PENN WEST PETROLEUM LTD (PWE) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity, weak operating cash flow, feeble growth in its earnings per share and generally disappointing historical performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 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, PENN WEST PETROLEUM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has declined marginally to $232.00 million or 9.37% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, PENN WEST PETROLEUM LTD has marginally lower results.
  • PENN WEST PETROLEUM LTD reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, PENN WEST PETROLEUM LTD swung to a loss, reporting -$1.71 versus $0.37 in the prior year.
  • PWE's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 34.46%, which is also worse than the performance of the S&P 500 Index. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.4%. Since the same quarter one year prior, revenues slightly dropped by 0.4%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • You can view the full analysis from the report here: PWE Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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