Weatherford International Ltd Stock Hold Recommendation Reiterated (WFT)

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) -- Weatherford International (NYSE: WFT) 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 revenue growth and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

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Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.8%. Since the same quarter one year prior, revenues slightly increased by 6.8%. 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.
  • In its most recent trading session, WFT 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, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • WEATHERFORD INTERNATIONAL 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. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WEATHERFORD INTERNATIONAL swung to a loss, reporting -$1.02 versus $0.25 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus -$1.02).
  • The gross profit margin for WEATHERFORD INTERNATIONAL is currently lower than what is desirable, coming in at 30.70%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 0.57% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$11.00 million or 107.85% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

Weatherford International Ltd. provides equipment and services used in the drilling, evaluation, completion, production, and intervention of oil and natural gas wells worldwide. Weatherford International has a market cap of $10.3 billion and is part of the basic materials sector and energy industry. Shares are up 21% year to date as of the close of trading on Friday.

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

--Written by a member of TheStreet Ratings Staff.

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