Chevron (CVX) Stock Falls as Thai Unit Plans IPO
NEW YORK (TheStreet) -- Chevron (CVX) - Get Report stock is declining 1.57% to $92.53 in afternoon trading on Monday as Star Petroleum Refining, its Thai refining unit, plans an IPO worth up to $434 million.
Star Petroleum's IPO will go toward repaying loans and fulfilling a government obligation for a stock listing, Bloomberg reports. The unit will sell about 345 million new shares at 9 baht per share to raise about 3.1 billion baht.
The offer includes 1.02 billion shares to local investors and 712 million shares to international investors, Bloomberg adds.
Chevron currently owns 64% of Star Petroleum, but the IPO will dilute its stake to 57.4%, according to Bloomberg. If investor demand surpasses the current offer, Chevron may sell a further 173.5 million shares of the company.
Additionally, Chevron is planning nearly 1,000 layoffs affecting staff in a neutral zone between Kuwait and Saudi Arabia, while a conflict between the countries has stopped work on the area's oil fields, sources told the Wall Street Journal.
Separately, TheStreet Ratings team rates CHEVRON CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate CHEVRON CORP (CVX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CVX's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
- CVX, with its decline in revenue, slightly underperformed the industry average of 37.2%. Since the same quarter one year prior, revenues fell by 37.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $5,360.00 million or 38.24% 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.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHEVRON CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CVX
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.