Rating Change #3

Whiting Petroleum Corporation ( WLL) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive.

Highlights from the ratings report include:
  • 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 77.6% when compared to the same quarter one year ago, falling from $86.61 million to $19.41 million.
  • Compared to its closing price of one year ago, WLL's share price has jumped by 47.32%, exceeding the performance of the broader market during that same time frame. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • Net operating cash flow has increased to $214.06 million or 10.03% when compared to the same quarter last year. Despite an increase in cash flow, WHITING PETROLEUM CORP's cash flow growth rate is still lower than the industry average growth rate of 25.18%.
  • The gross profit margin for WHITING PETROLEUM CORP is currently very high, coming in at 76.10%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.50% trails the industry average.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 23.5%. Since the same quarter one year prior, revenues rose by 23.1%. 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.

Whiting Petroleum Corporation engages in the acquisition, development, exploitation, exploration, and production of oil and gas primarily in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast, and Michigan regions of the United States. The company has a P/E ratio of 31.3, below the average energy industry P/E ratio of 33.8 and above the S&P 500 P/E ratio of 17.7. Whiting has a market cap of $7.3 billion and is part of the basic materials sector and energy industry. Shares are up 4.6% year to date as of the close of trading on Wednesday.

You can view the full Whiting Ratings Report or get investment ideas from our investment research center.

If you liked this article you might like

These Stocks Are Ready to Reverse Course

Sears Is Facing a Colossal Problem That Might Ignite a Bear Raid

Novartis AG, Sirius XM Radio, Coupa Software: 'Mad Money' Lightning Round

August's Inexplicable Selloffs Are Here: Cramer's 'Mad Money' Recap (8/17/17)

Britain's Prudential Sells U.S. Broker-Dealer Network to LPL Financial