NEW YORK (TheStreet) -- Shares of Denbury Resources Inc. (DNR) - Get Report are down by 1.70% to $7.51 in mid-morning trading on Tuesday, as some energy stocks are driven into the red today by the decline in the price of oil.
Crude oil (WTI) is dropping by 1.17% to $48.11 per barrel and Brent crude is falling by 1.85% to $55.25 per barrel this morning, according to the CNBC.com index.
Oil is retreating today as Iran and six world powers have entered the last day of talks regarding a nuclear deal that could result in larger oil exports out of the country, Reuters reports.
Along with Iran, the U.S., Britain, France, Germany, Russia, and China have until the end of the day to outline a decision on Tehran's nuclear program.
The countries are holding discussions in Switzerland and are dealing with the rate at which Western sanctions on Iran are being lifted as a hurdle that could scrap a deal, Reuters noted, adding that Russia's Foreign Minister Sergei Lavrov told reporters in Moscow that he feels the talks have a good chance of success.
However, Western diplomats minimized their expectations for the talks.
"If the flood gates to Iranian crude open, (prices) will probably test this year's lows again," Phillip Futures analyst Daniel Ang told Reuters.
If sanctions are lifted Iran could increase oil production by close to 500,000 barrels per day within six months and by another 700,000 bpd within another year, Reuters said.
Separately, TheStreet Ratings team rates DENBURY RESOURCES INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DENBURY RESOURCES INC (DNR) 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 compelling growth in net income, reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 304.1% when compared to the same quarter one year prior, rising from $89.99 million to $363.63 million.
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that DNR's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
- Net operating cash flow has declined marginally to $337.73 million or 3.22% when compared to the same quarter last year. Despite a decrease in cash flow of 3.22%, DENBURY RESOURCES INC is in line with the industry average cash flow growth rate of -13.05%.
- DNR'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 51.03%, 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. 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 Ratings Report