Remember they did 20% dilution at $30...and then another 15%+ dillution with convertible bond offering with $40 conversion....so $41 would be like the old $54. The stock is where it should be at $35 i think.
I'm betting it will fall back to the teens. We got 2 years of bad earnings ahead of us.
Every oil stock is in nose bleed territory relative to current and forward crude prices. They are making no money at current prices. WTI would need to rise $20 before companies like WLL CLR and EOG even make money again and probably $25-30 to actually support current stock valuations.
Amazing that it gets to trade $96 under current conditions. There will be no good news in the way of EPS for many years. Forward year crude trades in 60's as many years out as you want to look. EOG makes very very little in the 60's to support $96 or even $76
It is amazing that it can trade $96 when it traded $80 with $100 Brent. Growth is sorta over. It had a huge growth multiple at $110+. Every e&p can easily fall 10-20%. Not sure why anyone would buy them at this stage. But someone is.
I always thought cyclical stocks to a single digit multiple on peak earnings. But i guess that was before zero and negative rates. CLR is trading at near 20 times peak earnings. Thats what i don't get. Current price is cheap if crude sustains $90 again. But I would think this would trade with forward Crude prices that show dec 2018 crude at $64. Put a shale play differential on that and CLR is breakeven or losing money. So i don't get it.
It seems that the market is thinking like you. But i just spent some time doing some basic analysis and this company is very very lucky to be $48 and not $38 right now. The market is basically saying Crude will be right back to $80 in short order. I'm not sure that is right. I think this is once in a life time sea change. All countries are able to produce more crude than they one were and much easier. CLR needs $60 Bakken crude to be worth this price. And it is only $40 right now. The stock is $20 ahead of itself. They added $4 billion in debt last couple years. If the credit markets ever change these guys will be in big trouble. They will do a secondary or convertible real soon i think.
Conclusion of 60 minutes of research.
Nearly $9 billion in net liabilties. $4 billion in debt added in last few years when crude was near $90+.
Bakken crude trades at steep discount to WTI. $16 at times.
CLR needs WTI at $70+ just to break even. Yet 2016 futures prices are only $64.
CLR trades with a growth multiple premium, but no shale plays are growth stocks anymore. If they were to increase production again crude prices would just fall back into the red.
This company really does not make any money and there is no guarantee it ever will again for a lasting period. This company needs to raise money and will ultimately have to refinance $6 billion in debts and will likely have to pay much higher rates to do so. Junk bond interest payments would cripple the earnings power of this company.... Long term it is probably a $500-$700 million a year profit range company. Put a 12 typical oil sector PE on that and you get $6-$8 billion or about $20+ share price. Thats what this is worth and thats when and if oil recovers to a possible new normal price of $75/share.
20% more common. 36% more shares including convertible pricing at $39 conversion. Its like $46+ here new proforma market cap.
19 times 2014 EPS which was the super top in profitability seems generous. considering no earnings this year and maybe not much next year. This stock is lucky to be this high.
They know to use their smart phone and buy stuff for cheap. Herbalife is an 80's business. Who has money blow paying 3 times retail price for marginal quality?
and how to buy product for cheap on the internet. They don't need herbalife. Last 2 earnings reports show the company in decline for the first time in years.
Oil inventories are a red herring. Don't bother watching them they are just interesting statistics as far as predicting the oil price...notice there were not builds as oil fell from 95 to 85 to 75 to 70 but now that we are 50 we get huge builds every week and only now has oil stopped falling but is going sideways. The bigger issue for ESV is that is there reason to drill in the ocean anymore when it is so easy to drill in shale land driling. I don't know the answer. I read that 30% of oil production is off shore globally. So there will always be a strong need for off shore drillers like ESV. Timing this is pretty hard. ESV is not a bad company though....and they are still going to have profits next few years while others do not.... The fact that they just borrowed $1.1 billion at 5.25% tells you all you neeed to know...this is a strong company and has wall street support. Good luck Buy this on further dips and sell the rips.
But stock is green....hehe.
You sound like a good trader. It has gone up but it will likely go back down all I'm saying... It has had a nice counter trend move but unless PTEN is to make the ultimate V bottom and too the industry....it will likely fall back and retest the 17's. I would short this stock aggressively on any further rise and will do so...
True but you wouldn't buy it up 17% on year because clearly they are screwed for 2 solid years....$14 was a dumb price too low but I doubt it goes up much more. I mean 21% of the rigs already dropped in just 2 months plus I read a story saying pricing for the existing rigs could fall 30%....so revenue will be cut in half and analysts have loss estimates for 2 solid years. So they are toast. If you are long I don't mind telling you to sell and wait for a dip...its a no brainer.
Not sure what the buy order end of day was all about but I call BS.
Unfortunately they did it at about $35/share...would of been nice if they had waited....Now that the stock is under book value watch them not buy back any shares... Funny how that works... Hopefully for them they will keep buying back some shares under book value because i think the company will be around. Every 5 years there are all new teens and they like different things.