A drop in global crude prices has seen the Origin Energy Ltd (ASX: ORG) share price fall 1.5% on the ASX this morning despite Moody's Investor Services upgrading the company's credit rating yesterday afternoon.
What did Origin announce about the Moody's upgrade?
Origin noted the decision by Moody's to upgrade its long-term senior unsecured credit rating to Baa2 (stable) from Baa3 (positive).
Moody's also upgraded the long-term senior unsecured credit rating for Origin Energy Finance Limited to Baa2 (stable) from Baa3 (positive).
CFO Lawrie Tremaine said the company welcomed the upgrade which "reflects the efforts in recent years to materially reduce debt and improve business performance."
Origin continues to focus on reducing debt and improving shareholder returns and recently reinstated its 10 cents per share (cps) fully-franked dividend in the current financial year.
The company's half-year results reflected a strong financial position headlined by a statutory net profit after tax of $796 million and gearing reduced from 42% to 32% while underlying profit rose 52.6% to $754 million.
Why has the Origin share price fallen lower?
Global crude oil prices fell lower on Monday after Russia's Finance Minister Anton Siluanov hinted that OPEC and Russia could abandon an existing production cut deal.
Global supply factors remain tight and geopolitical factors such as the Libya conflict and Venezuelan output collapse should see crude prices remain near their 5-month highs reached in the last fortnight.
Should you buy Origin Energy shares?
Origin and peer AGL Energy Ltd (ASX: AGL) have soared higher in 2019 on the back of the higher oil prices and domestic gas shortage which has pushed east coast profits higher.
In terms of other oil and gas players, the share prices of both Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) have also rocketed in 2019 and look set to continue their growth path in the second half of the year.
In terms of relative value, Origin trades at a P/E multiple of 45.4x which is pretty pricey compared to the likes of AGL (9.1x), Beach (23.2x) and Santos (16.7x).
For those who want to look for growth outside of the Energy sector, this top-rated stock could boost portfolio gains as it continues to soar in a $22 billion industry.
