Seadrill (SDRL) Stock Falling as Oil Prices Slide

NEW YORK (TheStreet) -- Shares of Seadrill (SDRL) are falling 2.67% $10.58 on declining oil prices due to default concerns about Greece concerns and a growing oil supply, despite stronger demand, Reuters reports.

Crude (WTI) oil is decreasing 1.97% to $59.26 per barrel, and Brent crude is tumbling 2.47% to $62.67 per barrel, according to the CNBC.com index.

Analysts said the situation in Greece represented a bearish risk heading into the weekend, Reuters said.

Regarding the oil supply, there has been a buildup of North Sea and Nigerian crude cargoes, which is "putting price differentials under pressure and sending them in some cases to multi-year lows," according to Reuters.

Separately, TheStreet Ratings team rates SEADRILL LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SEADRILL LTD (SDRL) 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 revenue growth, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

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

  • SDRL's revenue growth has slightly outpaced the industry average of 1.7%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, SDRL maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD'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: SDRL Ratings Report

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