ConocoPhillips Trying to Break Out of Downward Trend
Oil exploration and production company ConocoPhillips (NYSE: COP) has been trending lower for the last year and a rally over the last two months may have investors feeling optimistic. However, there are a number of indicators that may prevent the rally from continuing and those indicators come from all angles—fundamental, sentiment, and technical analysis.
Let’s look at the technical side first. Conoco has jumped sharply since mid-August as oil prices rallied as well. Unfortunately for Conoco shareholders the stock is now facing resistance in two forms. We see on the weekly chart that over the last nine months a downward sloped trend channel has formed with the highs from the first quarter forming the upper rail. The lows from last December and August connect nicely to form the parallel lower rail. The rally in the last two months brought the stock up to the upper rail, but the stock couldn’t break through the resistance and has since fallen.
The second layer of resistance comes from the 52-week moving average. It is in such close proximity to the upper rail that you can barely see where it is right now. This could make it very difficult for the stock to move higher in the coming months.
Turning our attention to the fundamental indicators, Conoco saw its earnings decline by 7% in the second quarter and the upcoming third quarter report is expected to show a decline of 28.7%. The company reported EPS of $1.36 in the third quarter of 2018 and right now the consensus estimate is for the company to report EPS of $0.97. For 2019 as a whole, analysts expect to see the company’s earnings decline by 11%.
Earnings aren’t the only indicator that is declining either. Revenue was down by 9% in the second quarter and analysts expect revenue to decline by 9.3% for 2019.
Conoco does have some positive fundamental indicators working in its favor. The return on equity is at 17.1% and its profit margin is at 25.2%. The ROE is in the average range for most companies and the profit margin is above average.
The Tickeron Valuation Rating of 74 indicates that Conoco is slightly overvalued in the industry. A rating of 1 points to the most undervalued stocks, while a rating of 100 points to the most overvalued stocks. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. The current valuation isn’t bad with a P/E ratio of 9.34. Unfortunately with earnings and revenue declining the forward P/E is at 13.72. In most instances when a company is doing really well, the forward P/E tends to be lower than the trailing P/E.
The Tickeron PE Growth Rating for Conoco is 85, pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents. With the earnings expected to decline in the current year and earnings expected to grow by only 5% for 2020, the current PEG ratio for Conoco is only 0.16. The average PEG ratio for the oil and gas exploration and production sector is at 1.07.
Despite the downward trend in the chart and the drop in earnings and revenue, the sentiment toward Conoco is still really bullish. There are 21 analysts covering the stock with 18 “buy” ratings and three “hold” ratings. This puts the buy percentage at 85.7% and that is a much higher buy percentage than the average stock.
The short interest ratio for ConocoPhillips is only 1.6 and that is below average. This also indicates greater bullish sentiment than the average stock. The average short interest ratio tends to fall in the 2.7 to 3.3 range.
When you combine the declining earnings and revenue with the downward trend in the stock it isn’t exactly encouraging for the stock moving forward. When you add in the fact that there is more optimism being displayed toward the stock than the average stock, you get a scenario that tends to point toward the stock moving lower in the months ahead.
COP in -0.40% downward trend, falling for three consecutive days on June 06, 2023
Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where COP declined for three days, in of 301 cases, the price declined further within the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day moving average for COP crossed bearishly below the 50-day moving average on June 06, 2023. This indicates that the trend has shifted lower and could be considered a sell signal. In of 15 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 58 cases where COP's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on June 07, 2023. You may want to consider a long position or call options on COP as a result. In of 83 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for COP just turned positive on June 02, 2023. Looking at past instances where COP's MACD turned positive, the stock continued to rise in of 48 cases over the following month. The odds of a continued upward trend are .
COP moved above its 50-day moving average on June 02, 2023 date and that indicates a change from a downward trend to an upward trend.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where COP advanced for three days, in of 307 cases, the price rose further within the following month. The odds of a continued upward trend are .
COP may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 294 cases where COP Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Fundamental Analysis (Ratings)
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 79, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.654) is normal, around the industry mean (6.236). P/E Ratio (8.347) is within average values for comparable stocks, (15.997). Projected Growth (PEG Ratio) (0.867) is also within normal values, averaging (55.870). Dividend Yield (0.022) settles around the average of (0.090) among similar stocks. P/S Ratio (1.744) is also within normal values, averaging (148.202).
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. COP’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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Industry description
Market Cap
High and low price notable news
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a producer of wholesales oil and natural gas
Industry OilGasProduction
COP and
Correlation & Price change
A.I.dvisor indicates that over the last year, COP has been closely correlated with EOG. These tickers have moved in lockstep 89% of the time. This A.I.-generated data suggests there is a high statistical probability that if COP jumps, then EOG could also see price increases.
