BP Stock Declines as Oil Prices Fall

NEW YORK (TheStreet) -- BP (BP) shares are down 0.81% to $84.26 in afternoon trading on Thursday as oil prices declined today, pressuring the entire sector.

The fall in crude prices comes despite the fifth straight week of declining U.S. crude supplies in an already oversupplied market.

The glut of supply currently on the market is the reason for the oil price decline from over $100 a barrel over the past 12 months.

The Organization of the Petroleum Exporting Countries (OPEC) refusal to cut production is tied to its goal of maintaining market share as U.S. shale production continues to mature and prices have suffered as a result.

Investors have a negative view ahead of the OPEC meeting in Vienna on Friday at which the cartel is expected to set its production policy for the next six months.

U.S. crude futures closed trading down 2.75%, or $1.64, to $58.00 a barrel, its lowest closing this week.

Industry standard Brent crude for July delivery is down 2.71% to $62.07 per barrel, while West Texas crude for July delivery is down 2.7% to $58.03 in trading today.

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 EXXON MOBIL CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXXON MOBIL CORP (XOM) 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 deteriorating net income, poor profit margins and weak operating cash flow."

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

  • XOM's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Despite the fact that XOM's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 38.6%. Since the same quarter one year prior, revenues fell by 36.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for EXXON MOBIL CORP is rather low; currently it is at 18.89%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 8.34% is above that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 45.7% when compared to the same quarter one year ago, falling from $9,100.00 million to $4,940.00 million.
  • You can view the full analysis from the report here: XOM Ratings Report

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