Story updated at 9:50 a.m. to reflect market activity.
Shares of ConocoPhillips gained 0.4% to $80.19 in morning trading.
The analyst firm also increased its EPS estimates for the company through 2016. ConocoPhillips is improving upstream margins according to BMO analysts Iain Reid and Nikolas Stefanou.
"We have modelled COP's cash generation by region in order to test its ability to grow its upstream margins at its target of 3-5% CAGR to 2017," the analysts wrote. "Although our analysis gives a lower outcome of 2-3% growth, there is upside if COP can grow its Lower 48 unconventional volumes faster than we model, which is possible given its successful development program, as resources have already been substantially increased."
Separately, TheStreet Ratings team rates CONOCOPHILLIPS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONOCOPHILLIPS (COP) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- COP's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- CONOCOPHILLIPS reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONOCOPHILLIPS increased its bottom line by earning $6.43 versus $5.90 in the prior year. This year, the market expects an improvement in earnings ($6.49 versus $6.43).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 1.5% when compared to the same quarter one year prior, going from $2,050.00 million to $2,081.00 million.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: COP Ratings Report
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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.