Rating Change #5

Weatherford International Ltd ( WFT) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, robust revenue growth, impressive record of earnings per share growth, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • 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 101.1% when compared to the same quarter one year prior, rising from $94.65 million to $190.36 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 41.6%. Since the same quarter one year prior, revenues rose by 33.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WEATHERFORD INTERNATIONAL 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, WEATHERFORD INTERNATIONAL swung to a loss, reporting -$0.14 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.86 versus -$0.14).
  • 35.10% is the gross profit margin for WEATHERFORD INTERNATIONAL which we consider to be strong. Regardless of WFT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.60% trails the industry average.
  • WFT's debt-to-equity ratio of 0.77 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.86 is weak.

Weatherford International Ltd. provides equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells to independent oil and natural gas producing companies worldwide. The company has a P/E ratio of 43.6, below the average energy industry P/E ratio of 66.3 and above the S&P 500 P/E ratio of 17.7. Weatherford International has a market cap of $11.66 billion and is part of the basic materials sector and energy industry. Shares are up 10.5% year to date as of the close of trading on Thursday.

You can view the full Weatherford International Ratings Report or get investment ideas from our investment research center.

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