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 (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.
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Highlights from the ratings report include:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.4%. Since the same quarter one year prior, revenues slightly dropped by 5.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- HESS CORP's earnings per share declined by 9.6% 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, HESS CORP reported lower earnings of $5.01 versus $6.50 in the prior year. This year, the market expects an improvement in earnings ($5.90 versus $5.01).
- The gross profit margin for HESS CORP is currently lower than what is desirable, coming in at 28.10%. Regardless of HES's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.90% trails the industry average.
- 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 Oil, Gas & Consumable Fuels industry average. The net income has decreased by 9.6% when compared to the same quarter one year ago, dropping from $607.00 million to $549.00 million.
- Net operating cash flow has decreased to $1,240.00 million or 26.58% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
Hess Corporation, together with its subsidiaries, operates as an integrated energy company. The company operates in two segments, Exploration and Production (E&P) and Marketing and Refining (M&R). The company has a P/E ratio of 14.2, equal to the average energy industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Hess has a market cap of $17.94 billion and is part of the basic materials sector and energy industry. Shares are down 5.1% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet Ratings Staff
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