NEW YORK (TheStreet) -- Denbury Resources (DNR) shares are up 4.7% to $7.35 in trading on Tuesday as the entire oil sector benefits from rising oil prices ahead of OPEC's meeting in Vienna later this week.
Denbury shares have been tied to oil prices for the past few sessions and today's performance represents a reversal from yesterday's decline along with falling crude prices.
Industry standard Brent crude prices for July delivery is up 0.68% to $65.32 per barrel, while West Texas crude for July delivery is up 1.73% to $61.24 per barrel.
The rise in prices ahead of OPEC's biannual meeting this week is a result of a weakening dollar. The oil cartel is not expected to change its stance on production when it meets in Vienna Friday.
OPEC's refusal to cut production amid a glut of supply on the market is partially responsible for the steep decline oil prices have experienced since last June.
When OPEC last met in November the group agreed to keep production at 30 million barrels a day. The International Energy Agency estimated that the cartel produced 31.2 million barrels per day in April, its highest output since 2012, according to USA Today.
TheStreet Ratings team rates DENBURY RESOURCES INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DENBURY RESOURCES INC (DNR) 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 unimpressive growth in net income, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 284.8% when compared to the same quarter one year ago, falling from $58.31 million to -$107.75 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 57.39%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 282.35% compared to the year-earlier 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.
- Net operating cash flow has decreased to $137.76 million or 35.88% when compared to the same quarter last year. Despite a decrease in cash flow DENBURY RESOURCES INC is still fairing well by exceeding its industry average cash flow growth rate of -53.17%.
- DENBURY RESOURCES INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DENBURY RESOURCES INC increased its bottom line by earning $1.82 versus $1.11 in the prior year. For the next year, the market is expecting a contraction of 79.1% in earnings ($0.38 versus $1.82).
- 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DENBURY RESOURCES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: DNR Ratings Report