NEW YORK (TheStreet) -- Ensco (ESV) stock closed down 0.3% to $16.58 on Friday afternoon as oil price dropped to its lowest levels since March after reports showed the Organization of the Petroleum Exporting Countries produced more oil in July than in June.
WTI crude is down 3.44% to $46.85 per barrel, while Brent crude is falling 2.87% to $51.78 per barrel this afternoon, according to a CNBC.com index.
OPEC pumped an additional 140,000 barrels per day in July, to more than 32 million barrels per day, according to a Reuters survey.
In the U.S., production fell slightly to 9.5 million per day at the end of May, down from almost 9.7 million barrels a day in March, The Wall Street Journal reports.
London-based Ensco is an offshore drilling contractor with about 70 rigs worldwide.
Separately, TheStreet Ratings team rates ENSCO PLC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENSCO PLC (ESV) a SELL. This is driven by some concerns, 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 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:
- 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 Energy Equipment & Services industry and the overall market, ENSCO PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $427.80 million or 15.25% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ENSCO PLC has marginally lower results.
- ESV'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 65.54%, 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Despite the weak revenue results, ESV has outperformed against the industry average of 22.3%. Since the same quarter one year prior, revenues fell by 12.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- ENSCO PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENSCO PLC swung to a loss, reporting -$11.70 versus $6.08 in the prior year. This year, the market expects an improvement in earnings ($3.77 versus -$11.70).
- You can view the full analysis from the report here: ESV Ratings Report