This downgrade follows the company's first quarter results, reported in the beginning of May. It reported revenue of $921.8 million, or a loss of $1.11 per share, compared to revenue of $1.3 billion, or $0.96 per share in the same quarter a year ago.
"Earnings in the 2015 first quarter were negatively impacted by significantly lower realized sales prices for crude oil, natural gas liquids and North American natural gas, the effects of which were partially offset by higher production and sales levels," CFO John W. Eckart said.
He added that the company's average realized crude oil sales price fell more than $49 per barrel, which equates to a 51% reduction.
Murphy Oil is an independent exploration and production company, and its exploration activities are focused in four main regions: Deepwater Gult of Mexico, the Atlantic Margin, Southeast Asia and Australia.
TheStreet Ratings team rates MURPHY OIL CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MURPHY OIL CORP (MUR) 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, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.32, 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 0.87 is somewhat weak and could be cause for future problems.
- The gross profit margin for MURPHY OIL CORP is rather high; currently it is at 66.20%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -1.92% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, MURPHY OIL CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 109.3% when compared to the same quarter one year ago, falling from $155.25 million to -$14.44 million.
- You can view the full analysis from the report here: MUR Ratings Report