Crude oil (WTI) is dipping by 6.06% to $31.15 per barrel and Brent crude is sinking by 6.71% to $31.30 per barrel this afternoon, according to the CNBC.com index.
Despite lower oil prices, a supply response has been slow to come and demand from China is showing signs of moderating this year, according to Barclays analysts cited by Bloomberg.
Additionally, bearish comments about oil prices came from Morgan Stanley and Guggenheim Partners today. Morgan Stanley believes prices could drop to as low as $20 per barrel on a rapid rise in the dollar, while Guggenheim believes crude oil could hit $25 per barrel, Bloomberg reports.
"Look for more downside for oil, equities and credit," Scott Minerd of Guggeinhem told Bloomberg. "The first quarter is going to be rough but ultimately we should see this as a buying opportunity."
Continental Resources is a crude oil and natural gas exploration and production company headquartered in Oklahoma City.
Separately, 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 CONTINENTAL RESOURCES INC as a Sell with a ratings score of D+. This is driven by some concerns, 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 deteriorating net income, generally high debt management risk, 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:
- 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 115.4% when compared to the same quarter one year ago, falling from $533.52 million to -$82.42 million.
- The debt-to-equity ratio of 1.48 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CLR has a quick ratio of 0.70, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- 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, CONTINENTAL RESOURCES INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to $498.68 million or 41.01% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly 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 37.29%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 115.27% 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: CLR