NEW YORK ( TheStreet Ratings) -- Every trading day TheStreet Ratings' stock model reviews the investment ratings on around 4,800 U.S. traded stocks for potential upgrades or downgrades based on the latest available financial results and trading activity.
TheStreet Ratings released rating changes on 66 U.S. common stocks for week ending October 21, 2011. 35 stocks were upgraded and 31 stocks were downgraded by our stock model.
Rating Change #10
Hess Corp (HES) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself.Highlights from the ratings report include:
- HESS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HESS CORP increased its bottom line by earning $6.50 versus $2.28 in the prior year. This year, the market expects an improvement in earnings ($6.65 versus $6.50).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Oil, Gas & Consumable Fuels industry average. The net income increased by 61.9% when compared to the same quarter one year prior, rising from $375.00 million to $607.00 million.
- Although HES's debt-to-equity ratio of 0.30 is very low, it is currently higher than that of the industry average. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- HES has underperformed the S&P 500 Index, declining 10.99% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The gross profit margin for HESS CORP is rather low; currently it is at 24.10%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.20% trails that of the industry average.
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