Analyzing the financial statements for CoconoPhillips (NYSE:COP)
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What does the CoconoPhillips (NYSE:COP) stock offer its customers? It surely isn’t excitement so people looking for stability and a steady income flow in terms of capital increase or dividends should purchase this stock for sure. Now let’s look at the financial statements for the company which are public information and anyone can download them off the company site, however they are present in their raw form and unless you are a financial analyst they are a list of numbers to you.
The strongest factor which pops out of its balance sheet is the fact that the company is extremely strong in its cash reserves. Some might argue that having so much cash sitting on your balance sheet isn’t necessary a good thing. However, if the company wants to pay dividends and have smoothly run operations along with liquid assets then having cash on your balance sheet is acceptable. Once CoconoPhillips (NYSE:COP) has some exciting investment opportunities we could see this cash being invested in that project.
In its cash flow statement, CoconoPhillips (NYSE:COP) we observe that the company has been generating more cash in these six months when compared to the last six months of the year. This is from its operating activities, so the company is clearly doing well what it’s sought out to do. No company should have meagre cash generation from its operations and a huge inflow from investing and other activities because that denotes poor health. CoconoPhillips (NYSE:COP) however is doing well.
The company is seen to be investing more in these six months when compared to the previous six months and that’s an excellent sigh that the company is doing well. Investing in a company’s operations and activities which in this case are drilling new wells and exploring along with new production equipment being purchased. All of this capital expenditure was paid for with the company’s cash reserves which were beefed up by a sale of their assets which probably weren’t needed anymore.
There was ample cash left for its financing activities as we see that every company holds a certain interest in the form of stock options in one firm or another. This shouldn’t be excessive however, as playing in the stock market is only because you can’t see any immediate use for the cash. CoconoPhillips (NYSE:COP) however is using its excess cash to reduce its debt and for paying dividends. This act however proves the company to be an excellent and solid investment in the stock market as it has plenty of cash left over after investing and operations to reduce its debt and keep the stock holders happy.
If all these trends are projected in the coming years we see that the position of Cocono Philips (NYSE:COP) becoming extremely strong with the prices of energy, renewable as well as fossil, not following any drastic pattern. Its cash flow is expected to grow around 6-10% and this is due to the fact that they are shifting towards more favourble regimes as production in North America is declining.