One Reason Oasis Petroleum (OAS) Stock Is Falling Today

NEW YORK (TheStreet) -- Shares of Oasis Petroleum Inc. (OAS) are lower by 5.06% to $15.02 in early afternoon trading on Thursday, as energy stocks decline due to the slump in oil prices.

Oil prices were down to $66.25 per barrel on Thursday, after Saudi Arabia slashed the price of its oil in the U.S., which added to worries that it is more concerned with keeping market share than raising prices, the Wall Street Journal reports.

Saudi Aramco, a state run oil company, said on Thursday that it lowered its official selling price for all oil grades heading to Asia in January, between $1.50 per barrel and $1.90 per barrel. It also cut its prices for all crude grades to the U.S., between 10 cents and 90 cents per barrel, the Journal said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Oil prices have been on the decline for months as the growth in global supply, especially from the U.S., has exceeded demand, the Journal added.

Last week oil prices took a hit when OPEC announced it made the decision it would not cut oil production.

Another possible factor weighing down oil prices is comments made by Mario Draghi, the president of the European Central Bank, after the ECB announced its most recent policy decision, which is keeping its main interest rate unchanged, the Miami Herald reports.

Draghi didn't announce new stimulus, but hinted that the bank may act early next year. Draghi also said the ECB will be reassessing the success of its current stimulus program, as well as the impact of low oil prices on the European economy, the Herald added.

Separately, 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

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