TSC Ratings' Updates: Halliburton

The following ratings changes were generated on Tuesday, Oct. 14.

We've downgraded Goodrich(GR Quote), which supplies components, systems and services to the commercial and general aviation airplane markets and global defense and space markets, from buy to hold. Strengths include revenue growth, an impressive record of earnings per share growth and compelling growth in net income. Weaknesses include poor profit margins and a generally disappointing performance in the stock itself.

At 17.3% since the same quarter one year prior, revenue growth came in higher than the industry average of 3.7%. Goodrich reported significant EPS improvement in the most recent quarter, to $3.88 from $3.78 in the same quarter a year ago. The market expects further improvement to $4.95 this year. Return on equity has improved slightly over the same quarter last year, outperforming the S&P 500 but underperforming the aerospace and defense industry average. Goodrich's gross profit margin is lower than desirable at 33.8%, having decreased from the same quarter last year, but net profit margin, at 10.1%, is above the industry average.

Shares are down 49.76% on the year, underperforming the S&P 500. The overall market trend is bound to be a significant factor, and the stock's sharp decline last year could be seen a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

We've downgraded Marathon Oil(MRO Quote), which explores and produces crude oil and natural gas, from buy to hold. Strengths include robust revenue growth and good cash flow from operations, and weaknesses include deteriorating net income, poor profit margins and generally poor debt management.

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