NEW YORK (TheStreet) -- Diamondback Energy (FANG - Get Report) stock closed down by 4.59% to $62.20 on Wednesday after oil prices plunged because of higher inventories of petroleum products in the U.S. and increasing tensions in the Middle East, Reuters reports.
WTI crude is declining 5.50% to $33.99 per barrel, while Brent crude is decreasing 5.79% to $34.31 per barrel this afternoon, according to the CNBC.com index.
Commercial petroleum stockpiles increased by 7.3 million barrels for the week ended January 1 as gasoline and distillate fuel inventories rose by 10.6 million barrels and 6.3 million barrels, respectively, according to the U.S. Energy Information Administration.
Commercial crude oil inventories, however, decreased by 5.1 million barrels last week.
Global supplies could continue to grow as production cuts from OPEC countries seems more unlikely after Saudi Arabia broke ties with Iran over political and religious discord, Reuters added.
Midland, TX-based Diamondback Energy focuses on acquiring, developing, exploring and exploiting unconventional reserves of oil and natural gas.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate DIAMONDBACK ENERGY INC as a Hold with a ratings score of C. 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 good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 51.50% to $139.82 million when compared to the same quarter last year. In addition, DIAMONDBACK ENERGY INC has also vastly surpassed the industry average cash flow growth rate of -26.80%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- 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 458.4% when compared to the same quarter one year ago, falling from $43.74 million to -$156.78 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, DIAMONDBACK ENERGY INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FANG