Skip to main content

NEW YORK (TheStreet) -- Shares of Anadarko Petroleum (APC) - Get Free Report were falling 5% to $65.53 on Tuesday as oil prices fell to two-month lows due to concerns about oversupply.

WTI crude oil for December delivery was down 2.39% to $42.93 a barrel Tuesday afternoon, and Brent crude oil for December delivery was down 1.81% to $46.68 a barrel.

Analysts expect the U.S. Energy Information Administration to announce that U.S. crude inventories grew for the fifth week in a row on Wednesday, according to the Wall Street Journal. Anticipation of the larger stockpiles brought down prices of the commodity.

"The market is bracing for what would almost assuredly be another big storage build tomorrow," Bob Yawger, director of the futures division at Mizuho Securities USA, told the Journal. "It's going to put us close to record numbers."

U.S. crude stockpiles reached 476.6 million barrels on October 16, according to the EIA. Stockpiles hit a record high of 490.9 million barrels in April.

Anadarko is scheduled to announce its third quarter financial results after the market closes Tuesday. Analysts expect the oil company to report a loss of 73 cents a share and revenue of $2.31 billion for the quarter.

TheStreet Ratings team rates ANADARKO PETROLEUM CORP as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

We rate ANADARKO PETROLEUM CORP (APC) a SELL. This is driven by a few notable 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 unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.

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

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 73.1% when compared to the same quarter one year ago, falling from $227.00 million to $61.00 million.
  • Net operating cash flow has decreased to $1,243.00 million or 49.51% 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.
  • The share price of ANADARKO PETROLEUM CORP has not done very well: it is down 18.87% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • ANADARKO PETROLEUM CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ANADARKO PETROLEUM CORP swung to a loss, reporting -$3.51 versus $1.57 in the prior year. This year, the market expects an improvement in earnings (-$2.15 versus -$3.51).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ANADARKO PETROLEUM CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: APC