This Energy Stocks Chart Is Very Telling: It's Downhill From Here

The energy sector is expected to continue to grow despite macroeconomic uncertainties. However, Tellurian (TELL) is unlikely to see a positive trend. It might be a good idea to sell the energy stock right now, given the market dynamics and TELL’s dire fundamentals. Continue reading.

Oil prices could rise due to the recent announcements by major oil-producing nations cutting their oil production. The prices could rise due to increased demand from China. The overall energy sector is expected to grow over the next few years, but Tellurian Inc. (TELL), seems to be on the decline.

To close the last trading session at $1.42, the stock plunged 75.3% in the past year and 23.7% in the past three months.

Given its weak fundamentals, and current market conditions, the stock is expected to plummet further.

TELL is involved in the global natural gas industry. TELL is currently developing a portfolio that includes natural gas production, marketing and infrastructure assets. This includes an LNG export facility with a capacity of approximately 27.6 millions tons per year and associated pipeline.

TELL intends to be active in different areas of the oil and natural gas business. It anticipates that there will be intense competition. Depending on where you operate, there may be competition from large technology-driven companies or individuals.

These competitors may have more resources than TELL and could be able to compete against TELL. This could have a material adverse impact on TELL's business results, financial condition, liquidity, prospects, and other factors.

TELL considers the stock market price to be highly volatile. They expect it to remain volatile for the future. It has a monthly beta of 2.31 over five years, which indicates significant volatility.

TELL expects that adverse events will cause a significant drop in trading prices of the common stock. These include failure to obtain permits, unfavorable fluctuations in commodity prices, adverse regulatory developments and litigation.

These are some factors that could impact TELL's performance over the next months:

Disappointing Financials

TELL's total operating expenses and costs for the fiscal year ended December 31, 2022 were $409.70 million. This is an increase of 122.7% over the previous year. Its operating loss was $17.77million. TELL also reported a net loss in operation of $49.81 millions and a loss per share of $0.09 for the same year.

TELL's total liabilities and long-term liabilities were $297.54 and $456.60 respectively as of December 31, 2022. This compares to $88.80 and $114.71 millions as of December 31, 2020.

Unfavorable Bottom Line Estimates

TELL's fiscal third quarter, which will end September 2023, is expected to see a 15% decrease in EPS year-over-year to negative $0.08.

It is forecast that its EPS will fall 180.6% year over year to negative $0.25 for the fiscal year ending in December 2023. Street projects that its revenue for the same quarter will be $357.84million, a decrease of 8.7% from last year.

Stretched Valuation

TELL trades at 2.58x in terms of forward E/S sales, 45.8% more than the industry average 1.77x. The forward price/sales multiple for TELL is 2.24, which is 77.8% more than the industry average of 1.26.

TELL's trailing-12 month gross profit margin and EBITDA margin, which are 39.19% & 6.78% respectively, is 13.7% and 8.1% lower than the industry averages of 45.41% & 34.14%, respectively. Its trailing 12-month ROCE, ROTC, and ROTC are negative 9.13% and 3.49% respectively, which compares to the 21.44% and 7.09% industry averages, respectively.

Bleak Outlook Reflected in POWR Ratings

TELL's overall rating is F, which equates to Strong Sell in our POWR Ratings. The POWR Ratings take into account 118 factors. Each factor is weighted to the best degree.

Our proprietary rating system evaluates every stock based upon eight different categories. In line with its stretched valuation, it has a D grade for Value. Its D-grade for sentiment is in line with its unfavorable bottom lines.

The F grade for quality is consistent with the lower-than-industry profitability.

It is ranked #90 in the 91-stock Energy – Oil & Gas industry.

Click here to see other ratings for TELL Growth, Momentum and Stability.

Here are the top stocks within the Energy – Oil & Gas industry.

Bottom line

TELL had a disappointing quarter in 2022. TELL is currently trading below its 200-day and 50-day moving averages, $1.47 and $2.57 respectively. This indicates a downtrend. It might be prudent to avoid this stock due to its rising losses, low profitability and stretched valuation.

TELL's chances of outperforming in the coming weeks and months are very low. There are many excellent stocks in the Energy – Oil & Gas sector with high POWR Ratings. These three stocks are A-rated (Strong Buys) instead.

Marathon Petroleum Corporation (MPC).

Valero Energy Corporation (VLO)

PrimeEnergy Resources Corporation - PNRG

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TELL shares lost $0.04 (-2.82%), in premarket trades Monday. TELL shares have declined by -15.48% year-to-date compared to a 7.41% increase in benchmark S&P 500 index over the same period.

About the Author: Sristi Jayaswal

Sristi was interested in the stock market during high school, and she went on to become a financial journalist. Sristi prefers to invest in stocks that have solid long-term growth prospects. She has a master's in Accounting and Finance.