NEW YORK (TheStreet) -- Shares of National-Oilwell Varco (NOV - Get Report) are declining by 3.64% to $33.35 on Tuesday afternoon, as Keybanc downgraded the stock to "sector weight" from "overweight" on Tuesday. The firm did not list a price target on the stock.
The Houston-based company designs, manufactures and sells equipment and components used in oil and gas drilling, completion and production operations.
"At the start of 2016, the oil services industry is emerging from a difficult year of cost-cutting and downsizing. If global demand for oil and gas drilling services continues to slide, additional cost-saving actions will be taken," the firm said in an analyst note.
Additionally, oil prices are dropping this afternoon on worries about China's slowing economic growth and a strong dollar, Reuters reports.
Crude oil (WTI) is decreasing by 1.52% to $36.20 per barrel and Brent crude is dropping 1.99% to $36.48 per barrel, according to the CNBC.com index.
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate NATIONAL OILWELL VARCO INC as a Hold with a ratings score of C. 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 reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- NOV's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 1.00 is somewhat weak and could be cause for future problems.
- NOV, with its decline in revenue, slightly underperformed the industry average of 31.0%. Since the same quarter one year prior, revenues fell by 40.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Net operating cash flow has decreased to $410.00 million or 21.00% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, NATIONAL OILWELL VARCO INC has marginally lower results.
- 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 77.8% when compared to the same quarter one year ago, falling from $699.00 million to $155.00 million.
- You can view the full analysis from the report here: NOV