NEW YORK (TheStreet) -- Shares of Cabot Oil & Gas Corp.undefined closed down 1.71% at $27.58 today as oil prices declined.
Both benchmarks fell, with West Texas Intermediate down 2.83% to $49.36 at 4:14 p.m. in New York. Brent was lower by 1.66% to $59.76.
Crude oil futures extended losses on Monday as investors worried about oversupply and a strong dollar, Reuters reports.
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Separately, BMO Capital Markets lowered its price target today on the Houston-based company to $33 from $37, while maintaining an "outperform" rating.
"Cabot shares have become a placeholder, long during times of market turmoil or short during periods of risk-on. We attribute this to its defensive qualities, including a strong balance sheet and world class Marcellus asset. [There is] little to excite about, long or short, or [little] new to the story until 2017," BMO Capital Markets said.
That said, Cabot continues to "screen well on our maintenance capex versus cash flow analysis, with its 2015 budget implying spending of 136% of pre-hedge cash flow to hold 2015 volumes flat with 2014 fourth quarter [levels]," analysts added.
Given Cabot's "relative underperformance" over the past month while gas prices have rallied, analysts think shares are due for a bounce, but will remain "a low beta name."
TheStreet Ratings team rates CABOT OIL & GAS CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CABOT OIL & GAS CORP (COG) 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 robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 20.1%. Since the same quarter one year prior, revenues rose by 17.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.68, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.16, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for CABOT OIL & GAS CORP is currently very high, coming in at 72.58%. Regardless of COG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, COG's net profit margin of 19.68% significantly outperformed against the industry.
- COG'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 30.85%, 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. Although its share price is down sharply from a year ago, do not assume that it can now be tagged as cheap and attractive. The reality is that, based on its current price in relation to its earnings, COG is still more expensive than most of the other companies in its industry.
- You can view the full analysis from the report here: COG Ratings Report