NEW YORK (TheStreet) -- Shares of Penn West Petroleum (PWE) are down by 6.31% to $1.04 on heavy volume in early afternoon trading on Thursday, as the oil sector takes a hit from the decline in the price of the commodity.
Crude oil fell close to a five month low this morning as investors considered the positive demand data against the global oversupply, Reuters reports.
Crude oil (WTI) is lower by 2.59% to $42.18 per barrel and Brent crude is slipping by 1.41% to $48.96 per barrel this afternoon, according to the CNBC.com index.
Futures are trading in the red today as malfunction issues with a major BP (BP) refinery in the Midwest caused a shutdown and spurred doubts regarding the U.S.'s ability to process its own crude oil. Reuters added.
"The BP mishap could result in a backup in inventories in both Patoka and Cushing and result in a build in Cushing crude oil inventories in the coming weeks," consultant Dominick Chirichella told Reuters.
Separately, TheStreet Ratings team rates PENN WEST PETROLEUM LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate PENN WEST PETROLEUM LTD (PWE) 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PENN WEST PETROLEUM LTD 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, PENN WEST PETROLEUM LTD reported poor results of -$3.49 versus -$1.66 in the prior year.
- 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 119.6% when compared to the same quarter one year ago, falling from $143.00 million to -$28.00 million.
- 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENN WEST PETROLEUM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$67.00 million or 132.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 83.38%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 120.68% 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.
- You can view the full analysis from the report here: PWE Ratings Report