Noble (NE) Stock Lower Today on Slumping Demand, Falling Oil Prices

NEW YORK (TheStreet) -- Shares of Noble Corp.  (NE) are down 5.02% to $19.29 today as investors continue to sell off stock amid slumping demand for offshore driller rigs and the falling price of oil, according to Barron's.

Noble, an offshore drilling contractor for the oil and gas industry, is facing pressure to "stack" (take off the market) some of its rigs, according to Credit Suisse analyst Gregory Lewis.

"More rigs need to be stacked to balance the market and this only happens if the market continues to languish - no one will stack a rig in a rising market," Lewis said in a note.

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Offshore drillers Diamond Offshore Drilling Inc. (DO) and ENSCO Plc (ESV) have stacked 11 total rigs between the two of them in the last year, according to Credit Suisse.

Additionally, West Texas Intermediate crude dropped to the lowest level in more than two years after Saudi Arabia reduced the cost of its oil to U.S. customers in the face of soaring North American output, Bloomberg reported.

Separately, TheStreet Ratings team rates NOBLE CORP PLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate NOBLE CORP PLC (NE) 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 attractive valuation levels, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The gross profit margin for NOBLE CORP PLC is rather high; currently it is at 51.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.38% is above that of the industry average.
  • The revenue fell significantly faster than the industry average of 12.7%. Since the same quarter one year prior, revenues fell by 23.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $341.61 million or 33.74% 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.
  • 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 54.8% when compared to the same quarter one year ago, falling from $281.96 million to $127.49 million.
  • You can view the full analysis from the report here: NE Ratings Report

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