Denbury Resources (DNR) Stock Tumbling Today as WTI Falls Below $43
NEW YORK (TheStreet) -- Shares of Denbury Resources (DNR) - Get Report are tumbling, lower by 3.42% to $7.06 Monday afternoon, after WTI crude briefly fell below $43 a barrel, its lowest level since March of 2009, amid rising global inventories.
French bank Societe Generale estimates that stockpiles are increasing by 1.6 million barrels per day, and the rate of the build will rise further to 1.7 million barrels per day in the second quarter, according to Reuters.
WTI crude for April delivery is down 3.52% to $43.26 a barrel, while Brent crude for April delivery was trading lower by 3.42% to $52.80 a barrel as of 12:18 p.m. ET today.
Also, oil prices are falling as negotiations advanced toward a possible nuclear deal with Tehran. The agreement could allow more Iranian oil exports, Reuters reports.
Plano, TX-based Denbury Resources is an independent oil and natural gas company with oil and natural gas reserves, of which 83% is oil.
The company's focuses on two key operating areas including the Gulf Coast and the Rocky Mountain regions.
Insight from TheStreet's Research Team:
Jim Cramer commented on Denbury Resources in a recent post on RealMoney.com. Here is what Cramer had to say about the stock:
Compare that with Denbury Resources, a totally down-and-out leveraged oil and gas company that is struggling mightily with these lower oil prices. In fact, it is one of those that I would say, if oil doesn't go higher, might have a real chance of not making it in its current structure. Maybe there's some synergy with its stock symbol, DNR -- Do Not Resuscitate. It drops down to the minors, the S&P MidCap 400, the graveyard of the losers and the fertile ground for the next winners in the S&P 500 roster.
-Jim Cramer, 'Cramer: How Passive Is the S&P? (Part 1)' originally published 3/16/2015 on RealMoney.com.
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Separately, TheStreet Ratings team rates DENBURY RESOURCES INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DENBURY RESOURCES INC (DNR) 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 compelling growth in net income, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 304.1% when compared to the same quarter one year prior, rising from $89.99 million to $363.63 million.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that DNR's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
- Net operating cash flow has declined marginally to $337.73 million or 3.22% when compared to the same quarter last year. Despite a decrease in cash flow of 3.22%, DENBURY RESOURCES INC is in line with the industry average cash flow growth rate of -11.94%.
- DNR'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 52.39%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- You can view the full analysis from the report here: DNR Ratings Report