NEW YORK (TheStreet) -- Shares of Denbury Resources (DNR) - Get Report are higher by 8.47% to $2.05 in midday trading on Tuesday, as some energy and related stocks get a boost from the rebound in the price of oil.
The commodity is up from yesterday's 11 year lows, although a bearish outlook for 2016 and weaker profits for refining oil products are keeping oil prices from moving higher, Reuters reports.
Crude oil (WTI) is rising by 1.54% to $36.36 per barrel this afternoon and Brent crude is up by 0.08% to $36.38 per barrel, according to the CNBC.com index.
"We view the oversupply as continuing well into next year before rebalancing in the fourth quarter 2016," Goldman Sachs said in a note, according to Reuters.
Denbury Resources is a Plano, TX-based independent oil and natural gas company focusing on the Gulf Coast and Rocky Mountain regions.
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 DENBURY RESOURCES INC as a Sell with a ratings score of D-. This is driven by several 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, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
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 935.0% when compared to the same quarter one year ago, falling from $268.75 million to -$2,244.13 million.
- Currently the debt-to-equity ratio of 1.57 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, DNR has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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 Oil, Gas & Consumable Fuels industry and the overall market, DENBURY RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $272.68 million or 19.89% when compared to the same quarter last year. Despite a decrease in cash flow of 19.89%, DENBURY RESOURCES INC is in line with the industry average cash flow growth rate of -26.70%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.23%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 932.46% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: DNR