Denbury Resources (DNR) Stock Down as Oil Prices Reverse Gains

NEW YORK (TheStreet) -- Shares of Denbury Resources (DNR) are lower by 2.01% to $6.82 in early afternoon trading on Wednesday, as some energy related stocks take a hit from the sudden retreat in oil prices, following the release of weekly U.S. oil and fuel data.

Crude oil (WTI) is falling by 1.10% to $59.31 per barrel and Brent crude is slipping by 1% to $63.08 per barrel this afternoon, according to the CNBC.com index.

Data from the Energy Information Administration showed crude stocks fell by 2.7 million barrels and gasoline stocks grew by 460,000 barrels, The Wall Street Journal reports.

"U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years," the EIA said.

Data released by the America Petroleum Institute on Tuesday expressed that the organization's own survey showed a 2.9 million barrel decline in inventories for crude oil and refined gas. That exceeded the forecast for a 1.3 million barrel decline by analysts polled by The Journal.

"The market was all geared up because of the API report with the exceptional gasoline demand number. When we failed to live up to that expectation, it put a damper on the entire report," Phil Flynn, an account executive at Price Futures Group, told The Journal.

Separately, 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 a few notable 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 60.77%, 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 -53.28%.
  • 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 79.4% 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

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