NEW YORK (TheStreet) -- Shares of Halcon Resources (HK) are higher by 3.57% to $1.30 in mid-day trading on Tuesday. Some stocks within the energy sector are jumping this afternoon as the price of oil climbs on expectations of a reduction in shale output.
Crude oil (WTI) is rising by 3.58% to $60.22 per barrel and Brent crude is advancing by 3.78% to $65.06 per barrel this afternoon, according to the CNBC.com index.
Late Monday the U.S Energy Information Administration's drilling productivity report was released. The report showed that oil production in the seven top shale regions is expected to fall by 91,000 barrels a day to 5.5 million barrels a day in July versus June, The Wall Street Journal reports.
Later today it is anticipated that data from the American Petroleum Institute will show U.S. crude inventories fell for a sixth straight week for the week ended June 5, Reuters reports.
The EIA will release its stockpiles report on Wednesday. However, in a separate report the EIA raised its forecast for oil demand in 2015 to 380,000 barrels per day from its previous 340,000 bpd estimate.
Halcon Resources is a Houston-based independent energy company that focuses on the acquisition, production, exploration and development of onshore liquids-rich oil and natural gas assets in the U.S.
Separately, TheStreet Ratings team rates HALCON RESOURCES CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate HALCON RESOURCES CORP (HK) a SELL. This is driven by several 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, generally high debt management risk, 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 705.4% when compared to the same quarter one year ago, falling from -$72.96 million to -$587.64 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 80.17%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 652.63% 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.
- The debt-to-equity ratio is very high at 3.27 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, HK's quick ratio is somewhat strong at 1.10, demonstrating the ability to handle short-term liquidity needs.
- Net operating cash flow has decreased to $93.94 million or 41.10% when compared to the same quarter last year. Despite a decrease in cash flow HALCON RESOURCES CORP is still fairing well by exceeding its industry average cash flow growth rate of -53.19%.
- HALCON RESOURCES CORP 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, HALCON RESOURCES CORP turned its bottom line around by earning $0.47 versus -$3.11 in the prior year. For the next year, the market is expecting a contraction of 117.0% in earnings (-$0.08 versus $0.47).
- You can view the full analysis from the report here: HK Ratings Report