The latest FOMC meeting has had a huge impact on a number of securities around the globe. In particular, companies in the commodity world have been hit extremely hard, as a stronger dollar has dulled the appeal of natural resource producers.
The statement by Bernanke also helped to continue the slide in foreign and dividend paying stocks as well. After all, with rising rates, many are reevaluating their exposure to high dividend payers, while foreign securities are losing their appeal as investors look for safe havens.
While many firms are impacted by at least one of these trends, one firm that is being impacting by all three at once is Statoil (STO). As a result, the company could be facing some truly impressive headwinds and may be a strong avoid for now.
Statoil in Focus
In addition to the macroeconomic headwinds, the Norwegian oil producer is facing a host of company specific problems too. Earnings are expected to contract by 12.6% for the current year period, while the next five years look to have earnings slide by -2.3%. This helps to give the company a PEG ratio of -3.46, so don’t be fooled by the firm’s low PE of eight.
This poor growth track record is also partially due to the analyst disdain for the company and the ability of STO to increase earnings in the future. In fact, two estimates have gone down in the past two months, while the full year consensus has slumped from $3.01/share to the current consensus at $2.74/share in the past 90 days.
These concerns over earnings, along with the uncertain macroeconomic outlook, have crushed the stock price so far in 2013. STO has lost about 14.6% of its value YTD, including a nearly 10% loss in the past 90 days alone, underscoring how troubling events have been for the company lately.
Thanks to these issues, Statoil has earned itself a dreaded Zacks Rank #5 (Strong Sell). This means that the company is likely to underperform its peers in the future, and could be a company to avoid, especially if the broader macroeconomic situation continues to put pressure on this firm.
Unfortunately, the broad oil-integrated industry isn’t exactly having an easy time either. The space has a very low Zacks Industry Rank, as the concerns over commodity prices have hit a number of companies in the space.
However, there is one name in the space that has earned itself a Zacks Rank of 2 or "Buy", despite this sluggish environment. Braskem (BAK) has managed to see its rank jump from 3 to 2 in the past week, largely thanks to its impressive full year estimates, which look for EPS growth of 165% for the current year.
Given this impressive growth story, BAK could be a better pick for investors in the near term. This is especially true when comparing the firm to STO, as the Norwegian oil giant looks to face a number of issues thanks to its lack of growth and investors’ move away from dividend stocks thanks to the Fed.
- BRASKEM SA: Free Stock Analysis Report (email registration required)
- STATOIL ASA-ADR: Free Stock Analysis Report (email registration required)