Junior Oil Spec Pick – Penn West Petroleum Jim Cramer Review

NEW YORK (TheStreet) — Shares of Penn West Petroleum Ltd. (PWEGet Report) are up by 5.96% to $1.60 in mid-morning trading on Monday, as some stocks in the energy sector rise along with the price of oil, which is moving higher a result of the decline in the dollar.

Crude oil (WTI) is gaining by 0.46% to $46.78 per barrel and Brent crude is climbing by 0.72% to $55.72 per barrel this morning, according to the CNBC.com index.

The dollar is lower by 0.47% today, according to the Wall Street Journal dollar index.

In recent sessions currency markets have been volatile as investors consider the prospect of higher U.S. interest rates coming later this year, the Journal noted, adding that when the dollar declines oil becomes less expensive to those acquiring the commodity using foreign currencies.

“At this point, the U.S. Federal Reserve…will have as much of a role in determining the path of crude oil as will Tehran and Riyadh,” industry newsletter The Schork Report said, the Journal added.

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 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 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 reported a trend of declining 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 162.5% when compared to the same quarter one year ago, falling from -$675.00 million to -$1,772.00 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 $120.00 million or 63.52% 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 81.92%, worse than the S&P 500’s performance. Consistent with the plunge in the stock price, the company’s earnings per share are down 158.69% 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.
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