NEW YORK (TheStreet) -- Shares of Chevron (CVX) - Get Report closed up by 0.87% to $93.57 in afternoon trading on Wednesday, after the company won a $28 million judgement from the Supreme Court of Gibraltar, in a counter-suit against plaintiffs who sued the company over pollution in Ecuador.
The court ruled that a company set up in the country by the plaintiffs' attorneys to collect billions of dollars in court winnings must actually pay over $28 million to the oil giant
In 2011, activist and New York plaintiff's attorney Steven Donziger successfully engineered a $19 billion lower-court judgement against Chevron in Ecuador for rain forest contamination dating back to the late 1960s.
Ecuador's high court eventually upheld the ruling but halved the damages to $9.5 billion, according to Bloomberg.
Chevron counter-sued Donziger in a New York federal court accusing him of extortion. Last year, a U.S. district judge ruled that Donziger used fabricated evidence, bribery, and coercion to win.
Meanwhile, Chevron currently has no assets in Ecuador and has refused to pay the $9.5 billion judgement.
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 CHEVRON CORP as a Hold with a ratings score of C. 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 reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, disappointing return on equity and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CVX's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.91 is somewhat weak and could be cause for future problems.
- CVX, with its decline in revenue, slightly underperformed the industry average of 36.8%. Since the same quarter one year prior, revenues fell by 37.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CHEVRON CORP's return on equity is below that of both the industry average and the S&P 500.
- CHEVRON 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. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, CHEVRON CORP reported lower earnings of $10.14 versus $11.09 in the prior year. For the next year, the market is expecting a contraction of 67.5% in earnings ($3.29 versus $10.14).
- You can view the full analysis from the report here: CVX