NEW YORK (TheStreet) -- California Resources Corp. (CRC) - Get Report stock is decreasing 11.32% to $2.08 in afternoon trading on Monday after oil prices slumped as demand wanes amid growing oversupply.
WTI crude is down 3.39% to $36.81 per barrel, while Brent crude is declining 3.40% to $36.60 per barrel this afternoon, according to the CNBC.com index.
Sales of oil products in Japan, the fourth largest buyer of crude oil in the world, dropped to a 46-year low last month, Reuters reports.
The global oil surplus is exceeding two million barrels per day and has pushed oil prices down almost 70% since June 2014, Reuters added.
"A bearish trading stance is still being advised as we still view an ultimate price decline in nearby WTI and Brent futures to the $32.50 area," Ritterbusch & Associates' Jim Ritterbusch told Reuters.
Chatsworth, CA-based California Resources is an oil and natural gas exploration and production company that operates within California.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CALIFORNIA RESOURCES CORP as a Sell with a ratings score of D-. This is driven by multiple 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 deteriorating net income and generally high debt management risk.
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 when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 155.3% when compared to the same quarter one year ago, falling from $188.00 million to -$104.00 million.
- The debt-to-equity ratio is very high at 2.73 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
- The gross profit margin for CALIFORNIA RESOURCES CORP is rather high; currently it is at 50.32%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CRC's net profit margin of -16.61% significantly underperformed when compared to the industry average.
- CRC, with its decline in revenue, slightly underperformed the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 42.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CALIFORNIA RESOURCES 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. This year, the market expects an improvement in earnings (-$0.84 versus -$4.98).
- You can view the full analysis from the report here: CRC