NEW YORK (TheStreet) -- Shares of ENSCO PLC (ESV) are falling by 1.21% to $31.08 on heavy volume in late afternoon trading on Friday, as the energy sector drops due to oil prices hitting a five year low.
Oil finished lower today by 1.5% to $65.84 per barrel.
Oil prices declined Friday as the dollar strengthened, MarketWatch reports. A stronger dollar can hurt commodities that trade in dollars, making them more expensive for those that hold other currencies.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Oil fell on Thursday after Saudi Arabia cut the price of its oil in the U.S., which added to concerns the country is more focused on keeping market share than raising prices, the Wall Street Journal reported.
Separately, TheStreet Ratings team rates ENSCO PLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ENSCO PLC (ESV) 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 growth in earnings per share, revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ENSCO PLC has improved earnings per share by 16.3% 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, ENSCO PLC increased its bottom line by earning $6.04 versus $5.24 in the prior year. This year, the market expects an improvement in earnings ($6.22 versus $6.04).
- Despite its growing revenue, the company underperformed as compared with the industry average of 16.4%. Since the same quarter one year prior, revenues slightly increased by 8.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that ESV's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.03 is high and demonstrates strong liquidity.
- Net operating cash flow has declined marginally to $601.90 million or 7.14% 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.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, ENSCO PLC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: ESV Ratings Report