NEW YORK (TheStreet) -- Shares of Laredo Petroleum (LPI - Get Report) were falling 13.3% to $9.45 Monday as oil prices continued to fall and hit five and a half year lows.

WTI crude oil for February delivery was falling 3.3% to $50.95 a barrel Monday morning. Brent crude oil for February delivery was falling 4.2% to $54.06 a barrel.

Oil prices continued to fall due to global surplus and lackluster demand, according to Reuters. Oil output in Russia hit post-Soviet highs of an average of 10.58 million barrels a day in 2014, which helped drive oil prices down.

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"The easiest path for oil is down," Carsten Fritsch, senior oil and commodities analyst at Commerzbank told Reuters. "Almost all market news and the fundamental backdrop are negative and it is difficult to see much upside at the moment."

TheStreet Ratings team rates LAREDO PETROLEUM INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate LAREDO PETROLEUM INC (LPI) a SELL. This is driven by multiple 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 1.16 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, LPI has a quick ratio of 0.50, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • LPI'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 62.63%, 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.
  • 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, LAREDO PETROLEUM INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for LAREDO PETROLEUM INC is currently very high, coming in at 80.22%. Regardless of LPI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LPI's net profit margin of 41.65% significantly outperformed against the industry.
  • Net operating cash flow has increased to $136.24 million or 40.23% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.97%.
  • You can view the full analysis from the report here: LPI Ratings Report

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