ConocoPhillips (COP) Stock Rises Following Three Year Capex Budget Freeze

NEW YORK (TheStreet) -- ConocoPhillips (COP) shares are up 0.56% to $66.11 in afternoon trading on Monday as the oil and natural gas company plans on maintaining its current capital expenditure levels for the next three years, according to Reuters.

The announcement comes after the company already cut its 2015 capex budget to $11.5 billion from $13.5 billion in January in response to oil prices that have declined sharply over the past eleven months.

Other major oil companies have also taken to cutting capex budgets this year amid falling oil prices as the oil industry begins to accept sub-$100 per barrel crude as the new normal.

The ConocoPhillips announcement allowed it to outperform its industry peers who's stocks declined along with crude prices today.

Industry standard Brent crude for July delivery is down 0.72% to $66.33 per barrel, while West Texas crude is down 0.12% to $59.62 per barrel.

TheStreet Ratings team rates CONOCOPHILLIPS as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CONOCOPHILLIPS (COP) 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 reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The current debt-to-equity ratio, 0.46, 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 0.84 is somewhat weak and could be cause for future problems.
  • COP, with its decline in revenue, underperformed when compared the industry average of 38.3%. Since the same quarter one year prior, revenues fell by 49.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for CONOCOPHILLIPS is currently lower than what is desirable, coming in at 33.14%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 3.52% trails that of the industry average.
  • Net operating cash flow has significantly decreased to $1,870.00 million or 70.48% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • You can view the full analysis from the report here: COP Ratings Report

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