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Bear of the Day: China Petrol (SNP)

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If you were going to put together two areas of the market which are complete duds, I bet that China and oil would be on that list. Oil prices have been in free fall since topping out over $64 at the start of the year, tumbling down to $47 during Wednesday’s trade. Then, there’s China. Not only have they taken a hit due to the trade war, but now they are taking a punch because of the coronavirus. Mix these two terrible parts of the market together and you get a stock or two that you should probably avoid. One of these stocks is today’s Bear of the Day.

China Petroleum & Chemical Corporation SNP, an energy and chemical company, engages in oil and gas, and chemical operations in the People's Republic of China. It operates through five segments: Exploration and Production, Refining, Marketing and Distribution, Chemicals, and Corporate and Others. The company explores for and develops oil fields; produces crude oil and natural gas; processes and purifies crude oil; and manufactures and sells petroleum products.

China Petroleum & Chemical Corporation Price and Consensus

China Petroleum & Chemical Corporation Price and Consensus

China Petroleum & Chemical Corporation price-consensus-chart | China Petroleum & Chemical Corporation Quote

China Petrol is currently a Zacks Rank #5 (Strong Sell). The reason for the negative Zacks Rank is the series of earnings estimates coming in to the down side. Analysts have cut their earnings estimates for the current year and next year recently. Over the last sixty days, the Zacks Consensus Estimate for the current year has come down from $6.92 to $6.75 while next year’s number is off from $6.75 down to $5.53. Given horrendous China PMI numbers, I expect these numbers will continue to get worse.

The Oil and Gas – Integrated Emerging Markets industry ranks in the Bottom 24% of our Zacks Industry Rank. That doesn’t bode well for the industry as a whole, however, there are two stocks within the industry which have favorable Zacks Ranks. Investors looking for other stocks within the same industry should check out Zacks Rank #1 (Strong Buy) Ecopetrol EC and Zacks Rank #2 (Buy) Petrobras PBR.

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