WTI crude oil for February delivery was falling 1.9% to $56.02 a barrel Monday morning, and Brent crude oil for February delivery was falling 0.7% to $60.67 a barrel.
Oil prices fell to five-year lows after OPEC announced it would not lower its 2015 production rate in November while U.S. shale oil production increased.
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Curde oil prices will likely bottom out sometime in the first half of 2015, according to a Reuters monthly survey. Reuters expects oil prices to rebound in the second half of the year with a possible slowdown in U.S. shale production.
TheStreet Ratings team rates PACIFIC DRILLING SA as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate PACIFIC DRILLING SA (PACD) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio of 1.11 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, PACD has a quick ratio of 0.55, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- PACD'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 58.83%, 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.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, PACIFIC DRILLING SA's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- PACIFIC DRILLING SA reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PACIFIC DRILLING SA reported lower earnings of $0.12 versus $0.16 in the prior year. This year, the market expects an improvement in earnings ($0.82 versus $0.12).
- Net operating cash flow has increased to $100.49 million or 15.15% when compared to the same quarter last year. Despite an increase in cash flow, PACIFIC DRILLING SA's average is still marginally south of the industry average growth rate of 17.56%.
- You can view the full analysis from the report here: PACD Ratings Report