One area of the market that has been in trouble despite an overall surge in asset prices is the oil sector. This corner of the market has experienced underperformance relative to broad benchmarks, and there is little prospect for a turnaround in the weeks ahead either.
That is because, no matter what good news hits the oil market, prices for crude seem to have trouble breaking out higher. Supply issues remain at the forefront of investors’ minds, and there aren’t really any big demand catalysts on the horizon either. No wonder the energy sector currently has the worst sector rank right now, and why it has been in the doldrums for weeks.
Where to Avoid in Particular
While there are still some pockets of opportunity in this bleak environment, investors should take special care when considering the oil sector. In particular, the foreign market in the integrated space is weak these days, with a bottom 30% industry rank.
One that should definitely be on your radar in this space is Statoil ((STO – Free Report) ), the Norwegian oil giant that is majority owned by the government of Norway. This company has seen its shares struggle in recent trading, but the worst may still be ahead if we look to recent earnings estimate revisions by analysts covering Statoil.
Recent Estimates & Earnings
We have not seen any estimates go higher for the full year earnings picture in the past two months, and have instead seen the consensus estimate fall by roughly 9.3% in the time frame. We have also seen a sluggish trend for the following year where no estimates moved higher again.
The worst part about this is that the most recent estimates have been even lower than the consensus. The most accurate estimate for the current quarter is just 75 cents per share, a nearly 15% fall from the current consensus of 88 cents per share, or a nearly 23% cut from the consensus two months ago.
If that wasn’t enough, Statoil also has a horrific track record in earnings season. Sure, the company beat in its most recent report, but before that it saw three reports in a row that missed by over 100%, including three quarters that saw a loss when investors were expecting a profit.
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