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 reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, growth in earnings per share and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 24.5%. Since the same quarter one year prior, revenues rose by 42.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NOV's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.01, which illustrates the ability to avoid short-term cash problems.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- NATIONAL OILWELL VARCO INC has improved earnings per share by 14.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NATIONAL OILWELL VARCO INC increased its bottom line by earning $4.69 versus $3.98 in the prior year. This year, the market expects an improvement in earnings ($5.95 versus $4.69).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Energy Equipment & Services industry average. The net income increased by 15.0% when compared to the same quarter one year prior, going from $532.00 million to $612.00 million.
National Oilwell Varco, Inc. designs, constructs, manufactures, and sells systems, components, and products for oil and gas drilling and production, as well as provides oilfield services and supplies, and supply chain integration services to the upstream oil and gas industry worldwide. National Oilwell Varco has a market cap of $31.8 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 13.2, below the S&P 500 P/E ratio of 17.7. Shares are up 9.7% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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