NEW YORK (TheStreet) -- Shares of McDermott International (MDR) are higher by 9.29% to $2.77 in early afternoon trading on Tuesday, as energy and oil related stocks get a boost from the rise in oil prices.
Crude oil for February delivery is up by 2.52% to $56.65 per barrel on the NYMEX this afternoon.
McDermott is an engineering, production, construction, and installation company that focuses on designing and executing offshore oil and gas projects across the globe.
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Oil is on the rise today following strong U.S. economic growth data, and comments made by members of OPEC, MarketWatch reports.
Data released today showed U.S. third quarter gross domestic product grew by an unexpected 5% annual rate, the highest in 11-years, MarketWatch added.
Additionally, OPEC producers said they are expecting global oil prices to rebound in a range between $70 and $80 per barrel by the end of next year, Reuters reports.
The OPEC members said they are expecting oil to rebound on a revival in demand due to a global economic recovery, Reuters added.
Separately, 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 several 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 disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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 rather low; currently it is at 16.10%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, MDR's net profit margin of -8.12% significantly underperformed when compared to the industry average.
- MDR's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 70.98%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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 revenue fell significantly faster than the industry average of 16.1%. Since the same quarter one year prior, revenues fell by 39.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- MDR's debt-to-equity ratio of 0.60 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.40 is sturdy.
- You can view the full analysis from the report here: MDR Ratings Report