NEW YORK ( TheStreet) -- Seadrill (NYSE: SDRL) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The gross profit margin for SEADRILL LTD is rather high; currently it is at 61.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 39.60% significantly outperformed against the industry average.
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
- SEADRILL LTD has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, SEADRILL LTD increased its bottom line by earning $2.92 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($3.16 versus $2.92).
- SDRL, with its decline in revenue, underperformed when compared the industry average of 14.3%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, SEADRILL LTD's return on equity exceeds that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff