TSC Ratings' Updates: Citigroup

Net income has decreased by 38.7% when compared with the same quarter one year ago, falling from $191 million to $117 million, underperforming the S&P 500 and the chemicals industry. Shares are down 37.3%, reflecting the overall decline in the broad market and the sharp decline in the company's earnings per share, down 45.7%. In one sense, the stock's sharp decline last year is 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 Weatherford International(WFT Quote), which provides equipment and services used for the drilling, evaluation, completion, production, and intervention of oil and natural gas wells worldwide, from buy to sell, driven by its weak operating cash flow and generally disappointing historical performance in the stock itself.

Net operating cash flow has decreased to $203.14 million, or 20.41% when compared with the same quarter last year. In addition, the company's cash generation rate is significantly lower than the industry average. Weatherford's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared with the industry average. The company's quick ratio of 1.05 is sturdy. Its 42.8% gross profit margin is strong, though it has decreased from the same period last year. Weatherford's net profit margin of 14.6% trails the industry average.

Return on equity has improved slightly when compared with the same quarter one year prior, which can be construed as a modest strength in the organization. On the basis of ROE, Weatherford underperformed the energy equipment and services industry but outperformed the S&P 500.