Overall Score: 6
Chart: 1
Analyst Opinion: 1
| Strong Buy | 12 | |
| Buy | 21 | |
| Hold | 2 | |
| Underperform | 0 | |
| Strong Sell | 0 | |
Insiders: 1
Director Gerber bought 30,000 shares at $36.84
Management Discussion and Analysis: 0
Government, Political, Environmental and Regulation Risk is very high
Catastrophe / Accident Risk is high
Sales rose significantly due to higher rig count and demand for services particularly in NA
Operating Income increased due to improved demand and pricing particularly in the Completion and Production segment
Corporate expenses increased due to higher legal expenses
Demand for oil and gas determine end demand for Company services
End demand is directly impacted by Customer’s capex levels
Venezuelan operations are at high risk depending on Venezuelan govt sentiment
EPA / State regulations on hydraulic fracturing may negatively impact demand for those services
55% revenues from the US, no other country is more than 10% of sales
Defendant in Deepwater Horizon accident, no charges taken so far
Increased regulations may result in higher operating costs
Insurance costs and availability has worsened as a result of the Deepwater Horizon accident
SEC lawsuit related to accounting measures for recognizing revenue
$2bn credit facility maturing in 2016 and $2.7bn in cash ($500mm overseas)
No PENSION or OPEB risk
Stock Performance relative to Market: -1
Sector Outlook: 1
Long term fundamentals remain strong, short-intermediate period natural gas demand (through rigs is low). Hydraulic fracturing demand is strong but coming under margin pressure as companies turn away from dry gas and compete in oily sector. A lot of this will hinge on how easily oil can be transported out of North Dakota by pipeline.
Cash Flow: 0
Cash flow fluctuates significantly, due largely to volatile swings in demand impacting working capital and CAPEX
| 2009 | 2010 | 2011 | ||
| Revenues | $14,675 | $17,973 | $24,829 | |
| COGS | 12,474 | 14,735 | 19,811 | |
| Gross Profit | 2,201 | 3,238 | 5,018 | |
| SG&A | 207 | 229 | 281 | |
| EBIT | 1,994 | 3,009 | 4,737 | |
| D&A | 931 | 1,119 | 1,359 | |
| EBITDA | 2,925 | 4,128 | 6,096 | |
| Capex | (1,864) | (2,069) | (2,953) | |
| Interest | (285) | (297) | (263) | |
| Working Capital | 454 | (656) | (649) | |
| Taxes | (518) | (853) | (1,439) | |
| FCF | 712 | 253 | 792 | |
| CFO | 2,406 | 2,212 | 3,684 | |
| CFI | (3,085) | (1,755) | (3,190) | |
| CFF | 1,670 | (1,114) | 833 | |
| Net Income | 1,155 | 1,842 | 2,844 | |
PEG Ratio: 1
| P/E | 10.44 | |||
| 2011 | 2012 | |||
| EPS | 3.08 | 3.75 | 21.8% | |
| PEG Ratio | 0.48x |
Valuation: 1
Value Pro shows a 61% upside from the current price of $32.12.
Adjusted FCF for 7 yrs from 10 yrs
Adjusted growth rate to 8%
10 yr treasury at 3%
Company interest rate is 5.5%
Equity risk premium assumed at 5%
Beta is lowered to more accurately reflect low interest rates and a long term WACC
Catalyst: 1
Elimination of doubt relating to liabilities related to the Deepwater Horizon accident, Reduced regulation on hydraulic fracturing, Rebound in natural gas rig count