NEW YORK (TheStreet) -- Shares of Oasis Petroleum (OAS) - Get Report are falling by 5.06% to $8.63 in mid-day trading on Monday, as the decline in oil prices drags some stocks within the energy sector down today.
The price of the commodity is trading in the red as it is pressured by the decline in equities on Wall Street and by signs of a weakening economy in China, Reuters reports.
Crude oil (WTI) is down by 2.63% to $44.50 per barrel this afternoon, and Brent crude is slipping by 2.57% to $47.35 per barrel, according to the CNBC.com index.
An 8.8% decline in profits for China's industrial companies in August has resulted in a global decline in equity markets as well as commodities, Reuters added.
A heavy oversupply of oil and weakening demand for energy in China, the world's number two economy, has caused crude prices to more than halve over the last year, Reuters said.
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 reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for OASIS PETROLEUM INC is rather high; currently it is at 66.89%. Regardless of OAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OAS's net profit margin of -23.13% significantly underperformed when compared to the industry average.
- 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 this, the company manages to maintain a quick ratio of 0.45, which clearly demonstrates the inability to cover short-term cash needs.
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, OASIS PETROLEUM INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: OAS