NEW YORK (TheStreet) -- Shares of LyondellBasell Industries NV (LYB) are down 6.22% to $83.67 today as Brent crude oil prices hit a four-year low after Saudi Arabia cut the cost of its crude oil to the U.S., Bloomberg reports.
Stock of the independent chemical company has fallen by 27% since the middle of September when Lyondell Basell shares hit an all-time high of $115.40.
Additionally, LyondellBasell, has converted much of its U.S. chemicals facilities to run on natural gas feedstock, specifically ethane, which is cheap and abundant thanks to new fracking techniques, according to Forbes, giving LyondellBasell a huge advantage over foreign companies that use oil-based naphtha as a feedstock.
Now that Saudi Arabia has cut prices for U.S. oil exports and Brent crude has hit a four-year low, the so-called "ethane advantage" has shrunk considerably, Forbes added.
Separately, TheStreet Ratings team rates LYONDELLBASELL INDUSTRIES NV as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate LYONDELLBASELL INDUSTRIES NV (LYB) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- LYONDELLBASELL INDUSTRIES NV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, LYONDELLBASELL INDUSTRIES NV increased its bottom line by earning $6.78 versus $4.97 in the prior year. This year, the market expects an improvement in earnings ($8.48 versus $6.78).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 47.5% when compared to the same quarter one year prior, rising from $853.00 million to $1,258.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.21, which illustrates the ability to avoid short-term cash problems.
- You can view the full analysis from the report here: LYB Ratings Report