The stock is suffering due to falling oil prices that saw the price of a barrel of crude drop to a five year low of $63.72. In response to the drop, analysts at Global Hunter Securities downgraded the stock to "neutral" from "buy" in a note released today.
The company has seen 12 downward analyst revisions over the last four weeks since the release of its third quarter earnings results, though the company has outperformed its peers in terms of year over year quarterly revenue growth, showing growth of 21% compared to the industry average of 12%.
TheStreet Ratings team rates OASIS PETROLEUM INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate OASIS PETROLEUM INC (OAS) 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 robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.4%. Since the same quarter one year prior, revenues rose by 20.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- OASIS PETROLEUM INC 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. This trend suggests that the performance of the business is improving. During the past fiscal year, OASIS PETROLEUM INC increased its bottom line by earning $2.44 versus $1.66 in the prior year. This year, the market expects an improvement in earnings ($2.48 versus $2.44).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, OASIS PETROLEUM INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- OAS's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 47.23%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- Currently the debt-to-equity ratio of 1.51 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, OAS has a quick ratio of 0.68, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: OAS Ratings Report