NEW YORK (TheStreet) --Shares of Oasis Petroleum Inc. (OAS) - Get Report are higher by 5.31% to $17.83 in early afternoon trading on Tuesday. Some energy related stocks are gaining today as a result of the rally in oil prices.
The commodity is soaring due to tensions in Yemen, where top oil producer Saudi Arabia is involved in conflicts and after a forecast that shale output in the U.S. will show its first monthly decline in over four years, Reuters reports.
On Monday the Energy Information Administration said it expects shale production to decline by 45,000 barrels per day to 4.98 million bpd next month.
Yemen's liquefied natural gas plant announced on Tuesday that it declared force majeure due to deteriorating security, ceasing production, Reuters added.
"Geopolitical risk in oil markets remains elevated. From a fundamental perspective however, supply from the Middle East is expected to remain high, with Saudi Arabia and Iraqi production on the rise," JPMorgan (JPM) - Get Report analysts said in a note, Reuters noted.
Crude oil (WTI) is rising by 3.33% to $53.64 per barrel and Brent crude is advancing by 2% to $59.09 per barrel this afternoon, according to the index provided by CNBC.com.
Other energy stocks jumping today include Triangle Petroleum (TPLM) , up by 7.29% to $6.18, Marathon Oil (MRO) - Get Report, higher by 2.11% to $29.51, and Chevron (CVX) - Get Report, gaining by 1.88% to $108.50 this afternoon.
Separately, TheStreet Ratings team rates OASIS PETROLEUM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate OASIS PETROLEUM INC (OAS) 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, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."
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 223.9% when compared to the same quarter one year prior, rising from $54.49 million to $176.50 million.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, OASIS PETROLEUM INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 19.6%. Since the same quarter one year prior, revenues fell by 10.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- OAS'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 60.80%, 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.
- The debt-to-equity ratio of 1.44 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
- You can view the full analysis from the report here: OAS Ratings Report