NEW YORK (TheStreet) -- McDermott International (MDR - Get Report) fell 6.9% to $7.28 at 9:52 a.m. on Tuesday after the engineering and construction company announced the pricing of a public offering.
The company announced it would offer 10 million tangible equity units at a state value of $25 apiece. The offering includes an option for underwriters to purchase an additional 1.5 million units.
TheStreet Ratings team rates MCDERMOTT INTL INC as a "sell" with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MCDERMOTT INTL INC (MDR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 899.1% when compared to the same quarter one year ago, falling from $40.54 million to -$323.97 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, MCDERMOTT INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$88.50 million or 188.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 29.50%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 905.88% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, 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.
- MCDERMOTT INTL INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, MCDERMOTT INTL INC swung to a loss, reporting -$2.18 versus $0.85 in the prior year. This year, the market expects an improvement in earnings ($0.06 versus -$2.18).
- You can view the full analysis from the report here: MDR Ratings Report