NEW YORK (TheStreet) -- Shares of U.S. Silica Holdings (SLCA) are tanking, down 10.85% to $28.01 in morning trading Monday, as the fracking sand supplier reacts to news that the Organization of Petroleum Exporting Countries decided to maintain its output ceiling instead of cutting production to raise prices, Bloomberg reports.
OPEC's decision means that the oil market will stay oversupplied through the beginning of 2015, and prices could remain low for longer than previously expected, the Wall Street Journal reports.
U.S. is pumping crude oil at the fastest rate in three decades while global demand growth is slowing, pushing oil into a bear market, Bloomberg added.
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Frederick, MD-based U.S. Silica Holdings primarily produces sand and silica products used in shale oil and shale gas fracking, and also offers 250 products used in glass, chemicals, foundry, and building products industries.
Separately, TheStreet Ratings team rates U S SILICA HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate U S SILICA HOLDINGS INC (SLCA) a BUY. This is driven by some important positives, 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 robust revenue growth, expanding profit margins, good cash flow from operations, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SLCA's very impressive revenue growth greatly exceeded the industry average of 3.0%. Since the same quarter one year prior, revenues leaped by 67.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 38.24% is the gross profit margin for U S SILICA HOLDINGS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.10% is above that of the industry average.
- Net operating cash flow has significantly increased by 181.91% to $51.77 million when compared to the same quarter last year. In addition, U S SILICA HOLDINGS INC has also vastly surpassed the industry average cash flow growth rate of -55.16%.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Metals & Mining industry. The net income increased by 93.5% when compared to the same quarter one year prior, rising from $21.33 million to $41.28 million.
- SLCA's debt-to-equity ratio of 0.94 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 2.57 is very high and demonstrates very strong liquidity.
- You can view the full analysis from the report here: SLCA Ratings Report