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Will This Upgrade Help Key Energy Services (KEG) Today?

Stocks in this article: KEG

NEW YORK (TheStreet) -- Key Energy Services (KEG) has been upgraded to "hold" from "sell" with a $9 price target, Wunderlich said Tuesday. The firm said headwinds appear to be easing. 

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Separately, TheStreet Ratings team rates KEY ENERGY SERVICES INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate KEY ENERGY SERVICES INC (KEG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • KEG's debt-to-equity ratio of 0.61 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that KEG's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.72 is high and demonstrates strong liquidity.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The revenue fell significantly faster than the industry average of 8.2%. Since the same quarter one year prior, revenues fell by 22.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for KEY ENERGY SERVICES INC is currently lower than what is desirable, coming in at 28.28%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -3.45% is significantly below that of the industry average.
  • Net operating cash flow has decreased to $71.63 million or 31.30% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
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