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NEW YORK (TheStreet) -- Vantage Drilling (VTG) has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate VANTAGE DRILLING CO (VTG) a SELL. This is driven by multiple weaknesses, 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 unimpressive growth in net income, generally high debt management risk 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 182.1% when compared to the same quarter one year ago, falling from $6.84 million to -$5.62 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 60.43%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 200.00% 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.
- The debt-to-equity ratio is very high at 5.15 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, VTG's quick ratio is somewhat strong at 1.29, demonstrating the ability to handle short-term liquidity needs.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Energy Equipment & Services industry and the overall market, VANTAGE DRILLING CO's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- 46.38% is the gross profit margin for VANTAGE DRILLING CO which we consider to be strong. Regardless of VTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VTG's net profit margin of -2.70% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: VTG Ratings Report