Royal Dutch Shell (RDS.B) Stock Is Down as Oil Prices Settle in the Red

NEW YORK (TheStreet) -- Shares of Royal Dutch Shell (RDS.B) were down 2.67% to $58.35 in afternoon trading Monday, as both WTI and Brent crude prices fall to trade in negative territory, hitting three week low levels.

Oil prices were lower amid the situation in Greece, causing investors to flee from riskier assets, according to Reuters.

U.S. crude for August delivery settled down 2.18% to $58.32 a barrel today, after reaching its lowest level since June 8.

Brent crude settled down at $62.02 a barrel after hitting its lowest level since May 28 of $61.35 a barrel earlier in the session.

U.K.-based Shell is an independent oil and gas company, operating in three segments including upstream, downstream and corporate.

Separately, TheStreet Ratings team rates ROYAL DUTCH SHELL PLC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate ROYAL DUTCH SHELL PLC (RDS.B) 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 attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, weak operating cash flow and poor profit margins."

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

  • RDS.B's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.90 is somewhat weak and could be cause for future problems.
  • ROYAL DUTCH SHELL PLC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ROYAL DUTCH SHELL PLC reported lower earnings of $4.70 versus $5.18 in the prior year. This year, the market expects an improvement in earnings ($7.43 versus $4.70).
  • Net operating cash flow has decreased to $7,106.00 million or 49.18% when compared to the same quarter last year. Despite a decrease in cash flow of 49.18%, ROYAL DUTCH SHELL PLC is in line with the industry average cash flow growth rate of -53.17%.
  • Looking at the price performance of RDS.B's shares over the past 12 months, there is not much good news to report: the stock is down 30.04%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than 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.
  • You can view the full analysis from the report here: RDS.B Ratings Report

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