NEW YORK (TheStreet) --Halliburton (HAL) - Get Report stock is decreasing by 2.92% to $35.63 in mid-morning trading on Monday, after the company announced it will divest more assets to acquire Baker Hughes (BHI) .
Baker Hughes stock is down by 2.1% to $51.40 this morning.
Halliburton plans to divest its expandable liner hangers business, while Baker Hughes will sell its core completions business, sand control business in the Gulf of Mexico and offshore cementing business in Australia, Brazil, the Gulf of Mexico, Norway and the U.K.
Halliburton has also received offers for several drilling businesses last week.
The transaction is expected to close on December 16 because of an agreement with the U.S. Department of Justice to extend the review period by a month to December 15.
Halliburton agreed to acquire Baker Hughes in November 2014 in a $34.6 billion transaction that has been approved in Canada, Turkey, South Africa and Kazakhstan.
Separately, TheStreet Ratings team rates HALLIBURTON CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate HALLIBURTON CO (HAL) 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. 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:
- The current debt-to-equity ratio, 0.50, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, HAL has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
- HAL, with its decline in revenue, slightly underperformed the industry average of 22.5%. Since the same quarter one year prior, revenues fell by 26.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The gross profit margin for HALLIBURTON CO is rather low; currently it is at 19.29%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.91% trails that of the industry average.
- 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. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, HALLIBURTON CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full analysis from the report here: HAL