Patterson-UTI Energy (PTEN) Stock Hits One-Year Low as Oil Prices Sink to Four-Year Low

NEW YORK (TheStreet) -- Shares of Patterson-UTI Energy  (PTEN) hit a 52-week low of $20.36 on Thursday after crude oil prices hit a four-year low.

U.S. light crude dropped $2.97 to $74.21 per barrel, its lowest close since September 2010. Brent crude for December delivery fell 3.17%, or $2.55, to $77.83, its lowest intraday price since 2010.

The oil prices declined on fears that China's economy could slow further. China's economy slowed in October, as factory growth dropped and investment growth hit an almost 13-year low.

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Saudi Arabia has also stayed mum about a possible production cut.

More than 4.7 million shares had changed hands as of 3:14 p.m., compared to the average volume of 4,188,770.

Separately, TheStreet Ratings team rates PATTERSON-UTI ENERGY INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PATTERSON-UTI ENERGY INC (PTEN) a BUY. This is driven by several positive factors, 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 revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

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

  • PTEN's revenue growth has slightly outpaced the industry average of 13.8%. Since the same quarter one year prior, revenues rose by 15.7%. 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.
  • PTEN's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
  • PATTERSON-UTI ENERGY 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. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PATTERSON-UTI ENERGY INC reported lower earnings of $1.28 versus $1.95 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $1.28).
  • 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 Energy Equipment & Services industry. The net income has significantly decreased by 78.5% when compared to the same quarter one year ago, falling from $74.42 million to $15.98 million.
  • The share price of PATTERSON-UTI ENERGY INC has not done very well: it is down 10.90% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
  • You can view the full analysis from the report here: PTEN Ratings Report

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