Denbury Resources (DNR) Stock Sinks to One-Year Low on Slumping Oil Prices

NEW YORK (TheStreet) -- Shares of independent oil and gas exploration company Denbury Resources  (DNR) touched a 52-week low of $10.94 in afternoon trading Tuesday after oil prices declined to a four-year low.

Brent crude oil prices for December delivery declined 3% to $82.19 a barrel on London's ICE exchange. Brent last traded at this price in October 2010, according to MarketWatch.

Saudi Arabia chose Tuesday to change oil prices sold to U.S. and Asian buyers due to weak forecast for European growth. The Middle Eastern nation lowered prices for the U.S. and raised prices for large buyers such as China. Saudi Arabia is trying to stay competitive amid dropping oil prices, and the move further drove prices down Tuesday.

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Separately, TheStreet Ratings team rates DENBURY RESOURCES INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate DENBURY RESOURCES INC (DNR) 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 revenue growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and deteriorating net income."

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

  • DNR's revenue growth has slightly outpaced the industry average of 1.9%. Since the same quarter one year prior, revenues slightly increased by 3.7%. 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.
  • The gross profit margin for DENBURY RESOURCES INC is rather high; currently it is at 58.62%. 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 -8.25% is in-line with the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.50 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • 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 142.5% when compared to the same quarter one year ago, falling from $129.98 million to -$55.20 million.
  • Net operating cash flow has decreased to $329.85 million or 24.61% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: DNR Ratings Report

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