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Noble Corporation Stock Downgraded (NE)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Noble Corporation (NYSE: NE) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:

  • NE's revenue growth has slightly outpaced the industry average of 12.6%. Since the same quarter one year prior, revenues rose by 19.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 72.64% to $395.56 million when compared to the same quarter last year. In addition, NOBLE CORP has also vastly surpassed the industry average cash flow growth rate of -48.14%.
  • 45.40% is the gross profit margin for NOBLE CORP which we consider to be strong. Regardless of NE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NE's net profit margin of 13.00% compares favorably to the industry average.
  • NOBLE CORP's earnings per share declined by 15.1% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, NOBLE CORP reported lower earnings of $1.45 versus $3.01 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $1.45).
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry average. The net income has decreased by 15.2% when compared to the same quarter one year ago, dropping from $135.32 million to $114.77 million.
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Noble Corporation operates as an offshore drilling contractor for the oil and gas industry. The company offers contract drilling services for oil and gas wells. The company has a P/E ratio of 17.7, equal to the average energy industry P/E ratio and equal to the S&P 500 P/E ratio of 17.7. Noble has a market cap of $9.55 billion and is part of the basic materials sector and energy industry. Shares are up 24.7% year to date as of the close of trading on Thursday.

You can view the full Noble Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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