NEW YORK (TheStreet) -- Shares of National-Oilwell Varco Inc. (NOV) are down by -1.29% to $82.33 in pre-market trading on Wednesday, following a ratings downgrade to "hold" from "buy" at Jefferies Group (JEF).
The firm said it lowered its rating on the company, which provides equipment and components used in oil and gas drilling and production operations, as it believes most of National-Oilwell's intrinsic value has been realized.
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TheStreet Ratings team rates NATIONAL OILWELL VARCO INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NATIONAL OILWELL VARCO INC (NOV) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Energy Equipment & Services industry average. The net income increased by 17.3% when compared to the same quarter one year prior, going from $502.00 million to $589.00 million.
- NOV's revenue growth trails the industry average of 21.1%. Since the same quarter one year prior, revenues slightly increased by 8.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- NOV's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
- You can view the full analysis from the report here: NOV Ratings Report