NEW YORK (TheStreet) -- Shares of Devon Energy (DVN) - Get Report are higher by 0.47% to $31.83 in mid-afternoon trading on Tuesday, as some stocks within the oil and energy sector get a boost from the rebound in the commodity's price.
Devon Energy is an independent energy company that explores for, develops and produces oil, natural gas and natural gas liquids.
Crude oil (WTI) is gaining by 2.42% to $37.70 per barrel this afternoon and Brent crude is climbing by 2.76% to $37.63 per barrel, according to the CNBC.com index.
The price of oil was bumped higher on forecasts for an uptick in demand on the prospect of colder weather in the coming weeks, Reuters reports. However, the 2016 outlook still looks bearish due to the overall slow global demand.
Additionally, oil prices are getting a boost on the expectation that U.S. crude supplies will have declined last week, the Wall Street Journal reports. The Energy Information Administration will release its weekly inventory data on Wednesday. The American Petroleum Institute will release its numbers this afternoon.
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 DEVON ENERGY CORP 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 445.2% when compared to the same quarter one year ago, falling from $1,016.00 million to -$3,507.00 million.
- The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, DVN maintains a poor quick ratio of 0.89, which illustrates the inability to avoid short-term cash problems.
- 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, DEVON ENERGY CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has declined marginally to $1,553.00 million or 0.38% when compared to the same quarter last year. Despite a decrease in cash flow DEVON ENERGY CORP is still fairing well by exceeding its industry average cash flow growth rate of -26.85%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 45.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 449.79% 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: DVN