NEW YORK (TheStreet) -- LinnCo (LNCO) stock is retreating 9.95% to $3.97 on heavy trading volume on Friday after U.S. oil prices fell below $48 a barrel as output from the Organization of the Petroleum Exporting Countries continues to rise.
WTI crude is down 1.92% to $47.59 per barrel, while Brent crude is falling 1.48% to $52.52 per barrel this afternoon, according to a CNBC.com index.
A Reuters survey found that OPEC produced more than 32 million barrels of oil a day in July, an increase of 140,000 barrels per day, compared with June.
Additionally, LinnCo CEO Mark Ellis recommended that the board of directors should suspend dividend towards the end of the third quarter of 2015.
The decision came after the company reported disappointing 2015 second quarter earnings results.
Separately, TheStreet Ratings team rates LINNCO LLC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate LINNCO LLC (LNCO) 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 deteriorating net income, 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 69.2% when compared to the same quarter one year ago, falling from -$19.48 million to -$32.98 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 Oil, Gas & Consumable Fuels industry and the overall market, LINNCO LLC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to $40.52 million or 56.53% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, LINNCO LLC has marginally lower results.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 80.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 73.33% 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.
- Along with the very weak revenue results, LNCO underperformed when compared to the industry average of 38.8%. Since the same quarter one year prior, revenues plummeted by 65.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: LNCO Ratings Report