NEW YORK (TheStreet) -- Weatherford International (WFT) shares are down 1.88% to $14.35 in afternoon trading on Tuesday after oil equipment manufacturer was downgraded to "underperform" from "outperform" by analysts at Credit Agricole.
The downgraded outlook comes after the company reported a first quarter net loss of 4 cents per share, 5 cents short of analysts' consensus 1 cent per share earnings expectations last week. Revenue for the period was $2.79 billion, also falling short of analysts' $3.1 billion expectations.
Falling capital expenditure budgets due to falling oil prices have put pressure on the entire oil industry as the company reported a 22.3% year over year decline in revenue.
TheStreet Ratings team rates WEATHERFORD INTL PLC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate WEATHERFORD INTL PLC (WFT) 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. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 89.65% to -$42.00 million when compared to the same quarter last year. In addition, WEATHERFORD INTL PLC has also vastly surpassed the industry average cash flow growth rate of 12.48%.
- WFT, with its decline in revenue, underperformed when compared the industry average of 1.6%. Since the same quarter one year prior, revenues fell by 22.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- WEATHERFORD INTL PLC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WEATHERFORD INTL PLC reported poor results of -$0.75 versus -$0.44 in the prior year. This year, the market expects an improvement in earnings (-$0.05 versus -$0.75).
- The debt-to-equity ratio of 1.20 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, WFT maintains a poor quick ratio of 0.72, which illustrates the inability to avoid short-term cash problems.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Energy Equipment & Services industry and the overall market, WEATHERFORD INTL PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: WFT Ratings Report