This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Weatherford Dumps Ballast: Should You Buy Now?

NEW YORK (TheStreet) -- Weatherford International (WFT - Get Report) shares have done pretty well, rising 40% so far this year. That's better than the S&P 500's 27% gain, and better than most of Weatherford's peers in the oil-service business.

But the company built by Bernard Duroc-Danner is not out of the financial woods. It has more than $1 in debt for each $3 in assets, its cash position is poor and its profit margin hovers around zero.

The shares are rising because earlier this month it announced a divestiture plan aimed at reducing debt by $3 billion to $5 billion by the end of 2015. Also, this week the company settled foreign bribery charges, deferring two prosecutions and settling a civil case for $253 million. The company last year had earmarked $100 million to settle some charges.

The sales should cut Weatherford's debt by about half. The fines would nearly wipe out a cash position that stood at $316 million at the end of September.

[Read: How to Profit From Nuance's Crash]

Weatherford operates out of Houston, but it's technically based in Switzerland, having moved there in 2009 when Transocean (RIG) was also moving to Switzerland and Halliburton (HAL) was creating a joint headquarters in Dubai.

At the time there was great fear in the oil patch that the incoming Obama administration would be bad for the oil-service business. In fact, the U.S. oil business has boomed since that time, and this country is on track to become self-sufficient in oil.

The charges alleged by the government include bribery of Middle Eastern and African officials, including abuse of the United Nations' oil-for-food program, with lax controls that included falsified records. Duroc-Danner said after the settlement was announced this week that the charges are now behind the company.

I slammed Duroc-Danner's record one year ago, after the stock fell from a high of more than $25 to a 2012 low of less than $10. It reported $500 in tax errors during 2011, which it called an "honest mistake," then got a new chief financial officer.

[Read: Time to Consider Tesla, Warts and All]

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
WFT $12.69 0.00%
AAPL $128.46 0.00%
FB $78.97 0.00%
GOOG $558.40 0.00%
TSLA $203.34 0.00%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs