TSC Ratings' Updates: Halliburton

At 33.6%, Marathon's revenue growth has outpaced the industry average of 31.6% but doesn't appear to have trickled down to the company's bottom line, displayed by a decline in EPS, to $5.71 from $6.87. EPS have declined over the past two years, but the consensus estimate suggests this trend should reverse in the coming year and EPS should rise to $6.32. Net operating cash flow has significantly increased by 59.17% to $2,133.00 million when compared with the same quarter last year, exceeding the industry average cash flow growth rate of 19.22%.

Marathon's gross profit margin is extremely low at 11%, having decreased significantly from the past year. In addition, net profit margin of 3.8% trails the industry average. Net income has decreased by 50.1%, from $1,550 million to $774 million, when compared with the same quarter a year ago, significantly underperforming the S&P 500 and the oil, gas and consumable fuels industry.

We've downgraded industrial and engineering companyHarsco(HSC Quote) from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. Weaknesses include a generally disappointing performance in the stock itself and disappointing return on equity.

At 16.2%, revenue growth has slightly outpaced the industry average of 15.7% since the same quarter one year prior. The debt-to-equity ratio is somewhat low at 0.67, below the industry average, implying that there has been a relatively successful effort in the management of debt levels. The company also maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems. Harsco's gross profit margin, in increase from last year, is 35.4%, which we consider to be strong. However, the net profit margin of 8.20% trails the industry average. ROE has slightly decreased from the same quarter one year prior, implying a minor weakness in the organization and underperforming the machinery industry, though it exceeds that of the S&P 500. Shares have fallen 56.61% on the year, underperforming the S&P 500. But don't assume that the lower stock price tags Harsco as cheap and attractive. The reality is that, based on its current price in relation to its earnings, HSC is still more expensive than most of the other companies in its industry