Oasis Petroleum (OAS) Stock Falls as Oil Prices Decline

NEW YORK (TheStreet) -- Shares of Oasis Petroleum (OAS) were falling 6.6% to $16.54 Wednesday as oil prices resumed their decline after recent rebounds.

WTI crude oil for February delivery was falling 2.6% to $55.63 a barrel Wednesday morning, while Brent crude oil for February delivery was falling 2.6% to $60.07 a barrel.

Last month, OPEC announced that it would not lower its target production rate for 2015 despite recent increases in global supply due to increase in U.S. shale production, which helped bring oil prices lower.

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Last week, the International Energy Association lowered its outlook for 2015 global oil demand growth by 230 million barrels of oil a day to 900 million barrels of oil a day.

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, notable return on equity and reasonable valuation levels. 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 6.7%. 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.
  • 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, OASIS PETROLEUM INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for OASIS PETROLEUM INC is currently very high, coming in at 72.56%. Regardless of OAS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, OAS's net profit margin of 32.98% significantly outperformed against the industry.
  • 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 64.62%, 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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