Anadarko Petroleum Corp Stock Downgraded (APC)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

NEW YORK ( TheStreet) -- Anadarko Petroleum (NYSE: APC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and weak operating cash flow.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 15.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 50.4% when compared to the same quarter one year prior, rising from $121.00 million to $182.00 million.
  • The gross profit margin for ANADARKO PETROLEUM CORP is rather high; currently it is at 56.82%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.80% trails the industry average.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, ANADARKO PETROLEUM CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • Net operating cash flow has decreased to $1,779.00 million or 20.18% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

Anadarko Petroleum Corporation engages in the exploration, development, production, and marketing of natural gas, crude oil, condensate, and natural gas liquids (NGLs) in the United States and internationally. The company has a P/E ratio of 22.8, above the S&P 500 P/E ratio of 17.7. Anadarko has a market cap of $40.09 billion and is part of the basic materials sector and energy industry. Shares are up 6.3% year to date as of the close of trading on Friday.

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

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