Oil prices are sliding after the Energy Information Administration reported that gasoline stocks rose by 10.6 million barrels last week, which is the biggest build since 1993 and much higher than analysts' expectations for an increase of 2.3 million barrels, according to Reuters.
U.S. crude stockpiles fell by 5.1 million barrels last week, while analysts were expecting an increase of 439,000 barrels, Reuters reports.
"As big as the crude oil drawdown was, the build in gasoline was even more spectacular and crushing to the market," John Kilduff, a partner at AgainCapital, told Reuters. "Gasoline was the sole source of strength within the complex, and that looks to have ended."
Crude oil (WTI) is falling by 5.23% to $34.09 per barrel and Brent oil is dropping by 5.55% to $34.40 per barrel, according to the CNBC.com index.
Based in Bermuda, Seadrill is an offshore drilling contractor that provides offshore drilling services to the oil and gas industry.
Separately, 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 SEADRILL LTD as a Sell with a ratings score of D. This is driven by several 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, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
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 Energy Equipment & Services industry. The net income has significantly decreased by 1327.5% when compared to the same quarter one year ago, falling from $149.00 million to -$1,829.00 million.
- The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, SDRL maintains a poor quick ratio of 0.77, which illustrates the inability to avoid short-term cash problems.
- 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 Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 71.67%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 1293.54% 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.
- SEADRILL LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SEADRILL LTD increased its bottom line by earning $8.10 versus $5.47 in the prior year. For the next year, the market is expecting a contraction of 72.5% in earnings ($2.23 versus $8.10).
- You can view the full analysis from the report here: SDRL