WPX Energy (WPX) Stock Falls on Declining Oil Prices

NEW YORK (TheStreet) -- Shares of WPX Energy (WPX) were falling by 5.3% to $7.19 on Wednesday, as oil prices fell, despite lower U.S. crude inventory levels.

WTI crude oil for November delivery was down by 3.19% to $44.88 a barrel on Wednesday afternoon, and Brent crude oil for November delivery was down by 1.81% to $48.19 a barrel.

Oil prices were falling due to concerns about weak demand in China, and despite a decrease in U.S. stockpiles, according to Reuters.

A private survey showed that China's Caixin China manufacturing purchasing manager's index fell to a six and half year low of 47 in September, below a the 47.5 analysts surveyed by Reuters had expected.

In its weekly report the U.S. Energy Information Administration said that U.S. commercial crude stockpiles declined by 1.9 million barrels for the week ending September 18, compared to analysts' estimates of a 533,000 barrel decrease.

WPX Energy is a Tulsa-based natural gas and oil exploration and production company.

Separately, TheStreet Ratings team rates WPX ENERGY INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WPX ENERGY INC (WPX) a SELL. This is driven by multiple 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 poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself. "

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

  • The gross profit margin for WPX ENERGY INC is currently lower than what is desirable, coming in at 30.28%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -10.56% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $236.00 million or 24.84% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, WPX ENERGY INC has marginally lower results.
  • WPX's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 68.10%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, WPX ENERGY INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • WPX ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WPX ENERGY INC turned its bottom line around by earning $0.62 versus -$5.43 in the prior year. For the next year, the market is expecting a contraction of 135.5% in earnings (-$0.22 versus $0.62).
  • You can view the full analysis from the report here: WPX

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