Seadrill (SDRL) Stock Lower as Oil Prices Slide
NEW YORK (TheStreet) -- Seadrill (SDRL) - Get Report stock is retreating 5.12% to $6.30 in afternoon trading on Wednesday as oil prices declined after U.S. crude oil inventories increased.
WTI crude is down 2.67% to $43.03 per barrel, while Brent crude is falling 3.2% to $45.92 per barrel this afternoon, according to the CNBC.com index.
U.S. commercial crude oil stockpiles rose by 2.8 million barrels to 482.8 million barrels for the week ended October 30, according to data from the Energy Information Administration.
Analysts surveyed by Bloomberg were expecting an increase of 1.3 million barrels.
Production increased to 9.16 million barrels per day last week, compared with 9.11 million barrels per day the previous week.
"Downward price pressure is coming from continued global oversupply, expected to last through next year," Societe Generale's head of oil-market research Michael Wittner said, Bloomberg reported. "Oil continues to be choppy but rangebound."
Bermuda-based Seadrill is an offshore drilling contractor for the oil and gas industry.
Separately, TheStreet Ratings team rates SEADRILL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate SEADRILL LTD (SDRL) 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 attractive valuation levels, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for SEADRILL LTD is rather high; currently it is at 61.55%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 33.04% significantly outperformed against the industry average.
- Despite the weak revenue results, SDRL has outperformed against the industry average of 31.2%. Since the same quarter one year prior, revenues slightly dropped by 6.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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 Energy Equipment & Services industry and the overall market on the basis of return on equity, SEADRILL LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- 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. Along with the unfavorable debt-to-equity ratio, SDRL maintains a poor quick ratio of 0.81, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: SDRL
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.