NEW YORK (
) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, growth in earnings per share and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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Highlights from the ratings report include:
- RDC's very impressive revenue growth greatly exceeded the industry average of 10.6%. Since the same quarter one year prior, revenues leaped by 61.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RDC's debt-to-equity ratio is very low at 0.26 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 1.45, which illustrates the ability to avoid short-term cash problems.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 54.4% when compared to the same quarter one year prior, rising from $32.07 million to $49.52 million.
- ROWAN COMPANIES PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ROWAN COMPANIES PLC reported lower earnings of $1.08 versus $2.29 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $1.08).
- 45.40% is the gross profit margin for ROWAN COMPANIES PLC which we consider to be strong. Regardless of RDC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RDC's net profit margin of 14.80% compares favorably to the industry average.
Rowan Companies plc, through its subsidiaries, provides offshore oil and gas contract drilling services in the United States and internationally. The company has a P/E ratio of 26.4, above the average energy industry P/E ratio of 5.7 and above the S&P 500 P/E ratio of 17.7. Rowan Companies has a market cap of $4.19 billion and is part of the
industry. Shares are up 10.1% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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.