NEW YORK (TheStreet) -- Shares of Weatherford International (WFT - Get Report) are down by 9.14% to $9.20 in mid-morning trading on Monday, after the company announced new stock and debt offerings that total about $1 billion.
The Swiss oilfield services company plans to use the proceeds from the offering to pre-fund potential acquisitions, according to a statement released today.
The company is offering ordinary shares as well as mandatorily exchangeable subordinate notes, though neither offering has been priced yet.
Weatherford is looking to raise money amid declining capital expenditure budgets by some of the world's largest oil company's due to falling oil prices.
Citigroup and Wells Fargo are acting as the joint book runners of the offering.
Separately, TheStreet Ratings team rates WEATHERFORD INTL PLC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WEATHERFORD INTL PLC (WFT) a SELL. This is driven by a few notable 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 deteriorating net income, disappointing return on equity, poor profit margins, weak operating cash flow and generally high debt management risk. "
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 237.2% when compared to the same quarter one year ago, falling from -$145.00 million to -$489.00 million.
- 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, WEATHERFORD INTL PLC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for WEATHERFORD INTL PLC is currently lower than what is desirable, coming in at 28.66%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -20.46% is significantly below that of the industry average.
- Net operating cash flow has decreased to $291.00 million or 33.10% 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.
- Even though the current debt-to-equity ratio is 1.27, it is still below the industry average, suggesting that this level of debt is acceptable within the Energy Equipment & Services industry. Despite the fact that WFT's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.69 is low and demonstrates weak liquidity.
- You can view the full analysis from the report here: WFT