NEW YORK (TheStreet) -- ConocoPhillips (COP) - Get Report stock is gaining by 3.13% to $46.51 in afternoon trading on Tuesday, after the oil and gas company was included in RBC's list of 12 companies that will recover soonest when oil prices rebound next year, Barron's reports.
"We think stocks with lower leverage, good asset quality, and 'cheap' valuation are likely to perform the best and earlier," RBC said in an analysts note, Barron's added.
The list also includes Whiting Petroleum (WLL), Devon Energy (DVN), Oasis Petroleum (OAS), Rice Energy (RICE) and Continental Resources (CLR).
Analysts are expecting oil prices to remain low in the first half of 2016 and reach $60 per barrel in the 2016 fourth quarter, with a sustainable recovery in 2017, according to Barron's.
Additionally, ConocoPhillips sold its 50% stake in Polar Lights, a Russian joint venture with the state-run oil company Rosneft, the Financial Times reports.
The sale represents ConocoPhillips' exit from Russia after doing business in the country for 25 years.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CONOCOPHILLIPS as a Hold with a ratings score of C-. 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. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. At the same time, however, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- COP, with its decline in revenue, slightly underperformed the industry average of 36.9%. Since the same quarter one year prior, revenues fell by 39.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.83 is weak.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.37%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 166.41% 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.
- The gross profit margin for CONOCOPHILLIPS is currently lower than what is desirable, coming in at 29.54%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -14.74% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to $1,934.00 million or 53.73% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: COP