SandRidge Energy (SD) Stock Lower Today as Energy Sector Slumps - TheStreet

NEW YORK (TheStreet) -- Shares of SandRidge Energy (SD) - Get Report are down 0.85% to $1.75 in midday trading today as the energy sector is down more than 1% today.

Brent crude was lower by 3.78% to $60.76 at 12:10 p.m. in New York, while West Texas intermediate reversed early losses and was up 1.19% to $50.35.

The stock has rebounded from a session low of $1.61 today as WTI rallied after traders said the commodity and energy markets research firm Genscape reported that crude stocks at Cushing, OK, delivery point of the contract, rose by 1.4 million barrels last week, less than the 2.4 million barrel increase the week before, according to Reuters.

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But Brent resumed its decline today as a global supply glut erased gains from recent rallies spurred by disruptions to oil supplies from some members of the Organization of the Petroleum Exporting Countries, namely Libya.

Some analysts see the downward trend in crude continuing and contribute the recent upticks to speculation.

Much of the recent strength in oil had been due to "speculative buying," Commerzbank senior oil and commodities analyst Carsten Fritsch told Reuters. "All in all the market is still over-supplied by a wide margin," Fritsch said.

SandRidge Energy stock is extending losses today after the oil and natural gas company posted lower than expected fourth quarter revenue last week.

The independent oil and gas company posted revenue of $346.9 million for the period, falling short of the average of analysts' estimates of $374.11 million, according to data compiled by Reuters.

But, the company reported a profit of 8 cents per share for the fourth quarter, better than the break even quarter analysts were expecting.

Oklahoma City-based SandRidge Energy is an oil and natural gas company that focuses on exploration and production activities, operating businesses and infrastructure systems, including gas gathering and processing facilities, marketing operations, a saltwater disposal system, an electrical transmission system and a drilling rig.

Separately, the average recommendation of 17 brokers' estimates on the stock is a 3.4, with a 3 rating representing a "hold" and a 4 an "underperform," according to Reuters. The mean price target is $1.91.

TheStreet Ratings team rates SANDRIDGE ENERGY INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate SANDRIDGE ENERGY INC (SD) a SELL. This is driven by a number of negative factors, 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 weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has decreased to $164.89 million or 21.60% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SANDRIDGE ENERGY INC has marginally lower results.
  • SD'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 69.67%, 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.
  • Currently the debt-to-equity ratio of 1.80 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, SD's quick ratio is somewhat strong at 1.37, demonstrating the ability to handle short-term liquidity needs.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SANDRIDGE ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • SD, with its decline in revenue, slightly underperformed the industry average of 18.7%. Since the same quarter one year prior, revenues fell by 20.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: SD Ratings Report