Why InterOil (IOC) Stock Is Higher On Monday

NEW YORK (TheStreet) -- Shares of InterOil Corp. (IOC) are higher by 3.01% to $64.77 in mid-morning trading today following the company's decision to sell its oil refinery and petroleum products distribution business to privately held Puma Energy Group for $526 million, Reuters reports.

InterOil, an integrated energy company, is looking to shift its focus to upstream and liquefied natural gas businesses.

InterOil is selling assets located in Papua New Guinea, and the move could establish the company as a target for major oil and gas companies looking to expand in the region, Reuters added.

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Separately, TheStreet Ratings team rates INTEROIL CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTEROIL CORP (IOC) 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 compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself."

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

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 7859.9% when compared to the same quarter one year prior, rising from $4.00 million to $318.64 million.
  • The current debt-to-equity ratio, 0.30, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.23, which illustrates the ability to avoid short-term cash problems.
  • 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. In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, INTEROIL CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • IOC has underperformed the S&P 500 Index, declining 10.49% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • Net operating cash flow has significantly decreased to -$15.24 million or 137.56% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: IOC Ratings Report
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