NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself.
Highlights from the ratings report include:
- SPN's very impressive revenue growth greatly exceeded the industry average of 14.3%. Since the same quarter one year prior, revenues leaped by 151.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SUPERIOR ENERGY SERVICES INC reported significant earnings per share improvement 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. This trend suggests that the performance of the business is improving. During the past fiscal year, SUPERIOR ENERGY SERVICES INC increased its bottom line by earning $1.68 versus $1.03 in the prior year. This year, the market expects an improvement in earnings ($3.38 versus $1.68).
- Despite currently having a low debt-to-equity ratio of 0.51, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that SPN's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.73 is high and demonstrates strong liquidity.
- SPN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 38.44%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, SUPERIOR ENERGY SERVICES INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Superior Energy Services, Inc. provides specialized oilfield services and equipments to serve the production and drilling-related needs of oil and gas companies. It operates through three segments: Subsea and Well Enhancement, Drilling Products and Services, and Marine. The company has a P/E ratio of 10.2, below the average energy industry P/E ratio of 11.2 and below the S&P 500 P/E ratio of 17.7. Superior Energy Services has a market cap of $3.51 billion and is part of the
industry. Shares are down 23.1% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff