NEW YORK (TheStreet) -- ConocoPhillips (COP) shares are up 6.5% to $67.33 in trading on Wednesday as the price of a barrel of Brent crude rallied to near $63 in trading today on data that showed inventories were softening.
Oil prices rose today following a report by the U.S. Energy Administration showing that U.S. crude inventories fell by 847,000 barrels, though, due to OPEC's refusal to curtail production, analysts do not expect the fall in inventory to last.
Separately, shares continue to gain following the company's joint $559 million bid with Exxon Mobil (XOM) and Suncor Energy (SU) for exploration rights in the deep water Flemish Pass. If accepted the bid for an exploration license will be the largest in Canada's Newfoundland and Labrador province.
TheStreet Ratings team rates CONOCOPHILLIPS as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONOCOPHILLIPS (COP) a BUY. This is driven by multiple strengths, 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 increase in net income, reasonable valuation levels, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 9.0% when compared to the same quarter one year prior, going from $2,480.00 million to $2,704.00 million.
- 40.09% is the gross profit margin for CONOCOPHILLIPS which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.38% significantly outperformed against the industry average.
- Net operating cash flow has increased to $4,180.00 million or 12.82% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.58%.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.94 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: COP Ratings Report