WTI crude oil for May delivery was up 3.6% to $49.22 a barrel Wednesday afternoon, and Brent crude oil for May delivery was up 2.5% to $56.47 a barrel.
Oil prices were rising Wednesday due to the weaker U.S. dollar, according to Reuters. The dollar was down compared to the euro due to disappointing U.S. durable goods orders for February, according to the news service. Oil is priced against the dollar, which makes the commodity more attractive to investors using foreign currencies.
On Wednesday the U.S. Energy Information Administration said the U.S. crude inventories grew by 8.2 million barrels last week, above analysts' estimates for 5.1 million barrels. Oil prices briefly fell earlier in the day following the report.
TheStreet Ratings team rates SEADRILL LTD as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEADRILL LTD (SDRL) 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 notable return on equity, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly exceeds that of both the industry average and the S&P 500.
- SDRL, with its decline in revenue, underperformed when compared the industry average of 14.5%. Since the same quarter one year prior, revenues fell by 14.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The debt-to-equity ratio of 1.35 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, SDRL has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Net operating cash flow has decreased to $287.00 million or 41.66% 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: SDRL Ratings Report