Noble Corporation Stock Hold Recommendation Reiterated (NE)

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 ( TheStreet) -- Noble Corporation (NYSE: NE) has been reiterated by TheStreet Ratings as a hold with a ratings score of C . The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and feeble growth in the company's earnings per share.

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Highlights from the ratings report include:
  • NE's revenue growth has slightly outpaced the industry average of 12.6%. Since the same quarter one year prior, revenues rose by 19.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 72.64% to $395.56 million when compared to the same quarter last year. In addition, NOBLE CORP has also vastly surpassed the industry average cash flow growth rate of 18.34%.
  • 45.40% is the gross profit margin for NOBLE CORP which we consider to be strong. Regardless of NE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NE's net profit margin of 13.00% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry average. The net income has decreased by 15.2% when compared to the same quarter one year ago, dropping from $135.32 million to $114.77 million.
  • In its most recent trading session, NE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.

Noble Corporation operates as an offshore drilling contractor for the oil and gas industry. The company offers contract drilling services for oil and gas wells. Noble has a market cap of $8.7 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 16.8, below the S&P 500 P/E ratio of 17.7. Shares are up 14% year to date as of the close of trading on Wednesday.

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

--Written by a member of TheStreet Ratings Staff.

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