The company was awarded a contract for a large engineering, procurement, construction, and installation (EPCI) project by an unspecified operator in the Arabian Gulf. As part of the contract McDermott will engineer, fabricate, transport, and install four new offshore topsides facilities in the area. The company will also modify two existing production facilities.
"The project is part of a plan to boost oil production from existing fields, by the implementation of gas injection technology, and the installation of new production wells," president and CEO David Disckon said in a statement. "Our ability to provide sound technical solutions in both brownfield and greenfield scopes supported by our regional capabilities in providing fabrication, marine and manpower resources has helped us secure this award."
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TheStreet Ratings team rates MCDERMOTT INTL INC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate MCDERMOTT INTL INC (MDR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Energy Equipment & Services industry. The net income has significantly decreased by 226.6% when compared to the same quarter one year ago, falling from $50.61 million to -$64.07 million.
- 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, MCDERMOTT INTL INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for MCDERMOTT INTL INC is currently extremely low, coming in at 3.09%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -9.32% is significantly below that of the industry average.
- Net operating cash flow has significantly decreased to -$71.63 million or 487.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 34.37%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 228.57% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: MDR Ratings Report