Oasis Petroleum (OAS) Stock Falls Along With Oil Prices

NEW YORK (TheStreet) -- Oasis Petroleum (OAS) shares are down 2.81% to $17.27 in afternoon trading on Monday as falling crude prices take their toll on the oil sector today.

Industry standard Brent crude for June delivery is down 0.21% to $66.32 per barrel while West Texas crude for June delivery is down 0.63% to $58.78 in trading today. Light sweet crude for June delivery is down 0.06% to $66.43 per barrel on the New York Mercantile Exchange.

The drop in prices is due in part to a report today that showed U.S. stockpiles at an important hub in Cushing, OK fell by less than 100,000 barrels in the week ended Friday, leaving U.S. stockpiles near record highs, according to the Wall Street Journal.

U.S. crude stockpiles are currently at their highest levels in 80 years and the glut of supply on the global market is responsible for oil prices falling sharply over the past 11 months.

Oasis Petroleum is scheduled to release its first quarter earnings results after the closing bell on Wednesday. The company is expected to report earnings of 26 cents per share on revenue of $266.3 million.

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 compelling growth in net income, 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 223.9% when compared to the same quarter one year prior, rising from $54.49 million to $176.50 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When 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 the industry average and significantly exceeds that of the S&P 500.
  • Despite the weak revenue results, OAS has outperformed against the industry average of 33.1%. Since the same quarter one year prior, revenues fell by 10.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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 61.43%, 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. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • The debt-to-equity ratio of 1.44 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with this, the company manages to maintain a quick ratio of 0.44, which clearly demonstrates the inability to cover short-term cash needs.
  • You can view the full analysis from the report here: OAS Ratings Report
Must Read: Warren Buffett's Top 25 Stocks for 2015

More from Markets

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Week Ahead: Trade Fears and Stress Tests Signal More Volatility To Come

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Trump Takes Aim at Auto Imports; Markets End Mixed -- ICYMI

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

Video: What Oprah's Content Partnership With Apple Means for the Rest of Tech

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

REPLAY: Jim Cramer on the Markets, Oil, Starbucks, Tesla, Okta and Red Hat

Flashback Friday: The Market Movers

Flashback Friday: The Market Movers