NEW YORK (TheStreet) -- Parker Drilling (PKD) shares are down 4.2% to $5.90 in early market trading on Monday after being downgraded to "equal weight" from "overweight" by analysts at Stephens.
The firm also lowered its price target to $8 from $9 as analysts made a valuation call on the contract drilling service provider.
TheStreet Ratings team rates PARKER DRILLING CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PARKER DRILLING CO (PKD) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 89.4% when compared to the same quarter one year prior, rising from $8.28 million to $15.68 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 20.4%. Since the same quarter one year prior, revenues rose by 12.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- PARKER DRILLING CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PARKER DRILLING CO reported lower earnings of $0.22 versus $0.31 in the prior year. This year, the market expects an improvement in earnings ($0.42 versus $0.22).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
- The gross profit margin for PARKER DRILLING CO is currently lower than what is desirable, coming in at 31.34%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 6.16% trails that of the industry average.
- You can view the full analysis from the report here: PKD Ratings Report
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