The independent crude oil and natural gas exploration and production company could feel the effects of a large funding gap, analysts said.
"We downgrade Continental Resources to where we still see strong growth and returns but see valuation reasonable and see a large funding gap," analysts said, adding "In general, we see funding gap deterioration in a $74 WTI oil price for 2015."
Shares of Continental Resources are down 6.42% to $53.09.
Separately, TheStreet Ratings team rates CONTINENTAL RESOURCES INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONTINENTAL RESOURCES INC (CLR) a BUY. This is driven by a number of strengths, 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 good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has slightly increased to $741.79 million or 6.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -6.28%.
- CONTINENTAL RESOURCES INC 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONTINENTAL RESOURCES INC increased its bottom line by earning $2.07 versus $2.03 in the prior year. This year, the market expects an improvement in earnings ($3.16 versus $2.07).
- The gross profit margin for CONTINENTAL RESOURCES INC is currently very high, coming in at 75.73%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, CLR's net profit margin of 11.68% compares favorably to the industry average.
- CLR, with its decline in revenue, underperformed when compared the industry average of 2.7%. Since the same quarter one year prior, revenues fell by 18.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- In its most recent trading session, CLR has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: CLR Ratings Report