NEW YORK (TheStreet) -- Penn Virginia (PVA) shares are down 4.82% to $4.74, giving back the gains the stock made in afternoon trading yesterday following reports that the independent oil explorer was a takeover target of oil giant BP (BP) - Get Report.
The company yesterday afternoon said that it "did not issue a press release" concerning a bid after the stock rose as high as $5.38 per share yesterday.
The company has been under pressure from activist investor George Soros, who owns an 8% stake in the firm, to sell itself and the company hired an investment bank to seek out a partner in February, according to Finalternatives.
BP offered to acquire the company for $8 per share, according to the report, and Penn Virginia rejected the offer because it believes that that purchase price undervalues the company.
Penn Virginia is looking for at least $10 per share.
Penn Virginia shares have decreased by more than 75% over the past 12 months as falling oil prices forced the stock down to its opening trading price of $4.50 today, well below last June's price of $17.
TheStreet Ratings team rates PENN VIRGINIA CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate PENN VIRGINIA CORP (PVA) a SELL. This is driven by a few notable 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, generally high debt management risk, 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 397.3% when compared to the same quarter one year ago, falling from $19.23 million to -$57.17 million.
- Currently the debt-to-equity ratio of 1.98 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, PVA has a quick ratio of 0.63, this demonstrates the lack of ability of the company to cover short-term liquidity 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENN VIRGINIA CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $45.55 million or 31.56% when compared to the same quarter last year. Despite a decrease in cash flow PENN VIRGINIA CORP is still fairing well by exceeding its industry average cash flow growth rate of -53.29%.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.41%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 500.00% 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.
- You can view the full analysis from the report here: PVA Ratings Report