NEW YORK (TheStreet) -- Shares of Key Energy Services (KEG) - Get Key Energy Services, Inc. Report slumped 8.14% to $2.02 in midday trading today as oil prices fall on data from the Energy Information Administration that showed an increase in U.S. crude rose to record levels last week.
Both benchmarks are down, with West Texas Intermediate falling 1.8% to $51.20 at 11:56 a.m. in New York. Brent was lower by 0.93% to $59.97.
U.S. commercial crude oil inventories rose by 7.7 million to a record 425.64 million barrels last week, according to the EIA, adding more oil to an already existing global glut that is pressuring the industry.
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"The report [is] basically bearish because you continue to add crude to storage, showing it will take some time for the drops in rig counts to have an impact on supply," Tradition Energy analyst Gene McGillian told Reuters.
Separately, the average recommendation of 20 brokers' estimates on the Houston-based well servicing contractor's stock is 2.55, with a 2 rating representing an "outperform" and a 3 rating a "hold," according to Reuters. The mean price target is $2.52.
TheStreet Ratings team rates KEY ENERGY SERVICES INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate KEY ENERGY SERVICES INC (KEG) a SELL. This is driven by multiple 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KEY ENERGY SERVICES INC 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, KEY ENERGY SERVICES INC swung to a loss, reporting -$0.14 versus $0.68 in the prior year. For the next year, the market is expecting a contraction of 171.4% in earnings (-$0.38 versus -$0.14).
- 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 Energy Equipment & Services industry. The net income has significantly decreased by 1183.6% when compared to the same quarter one year ago, falling from -$4.85 million to -$62.23 million.
- 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, KEY ENERGY SERVICES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for KEY ENERGY SERVICES INC is currently lower than what is desirable, coming in at 25.65%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -17.01% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $18.82 million or 82.94% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: KEG Ratings Report