Earnings Preview: National Oilwell - Analyst Blog
02 February 2012 - 1:30AM
Zacks
Oilfield services company
National Oilwell Varco (NOV) is scheduled to
report its fourth quarter and full year 2011 results on February 2,
2012, before the opening bell.
The Zacks Consensus Estimate for
the upcoming quarter is a profit of $1.30 per share on revenues of
$110.4 billion. For the full year, our earnings per share
projection is $4.69 on revenues of $470.1 billion.
Third Quarter 2011
Recap
National Oilwell reported
better-than-expected third-quarter 2011 results earnings per share
(excluding transaction charges) of $1.26, comfortably above the
Zacks Consensus Estimate of $1.17 and the year-ago adjusted profit
of 97 cents.
Quarterly revenue rose 24.2% year
over year from $3,011.0 million to $3,740.0 million and was 2.4%
above our projection.
(Read our full coverage on this
earnings report: National Oilwell 3Q Earnings Jump)
Agreement of
Analysts
Analysts exhibit a positive
sentiment for National Oilwell in the upcoming quarter based on its
strong financial base, robust backlog, improved outlook in the
drilling scenario and the company’s technologically sophisticated
drilling equipments.
For the fourth quarter, out of the
20 analysts covering the stock, 3 analysts have increased their
estimates, while none decreased the same in the last 30 days. In
the last 7 days, only one analyst has revised the estimate upward
while none moved in the opposite direction.
For fiscal 2011, 2 analysts (out of
21 analysts) hiked their estimates while none reduced the
projection over the past one month. In the last seven days, no
estimate revision was noticed.
Magnitude of Estimate
Revisions
Considering the analysts’ earnings
revision, the Zacks Consensus Estimate for the fourth quarter upped
by a penny to $1.30 in the last 30 days. Over the past 7 days, the
estimate remained unchanged
For the full year, estimate
remained static at $4.69 over the last one month and one week.
Surprise
History
The company has a history of
positive earnings surprises, surpassing the Zacks Consensus
Estimate in 3 of the last 4 quarters. The company recorded a
minimum surprise of negative 0.99% in first quarter 2011 to a
maximum of 12.87% in second quarter 2011. On an average, the
earnings surprise stood at 7.24%.
Our
Recommendation
We are maintaining our long-term
Neutral recommendation on National Oilwell shares.
We appreciate the company’s healthy
backlog, solid balance sheet and strength in international
operations, particularly in the Middle East and Brazil. The APL
acquisition has further boosted National Oilwell’s earnings
visibility by expanding its floating production storage and
offloading vessel (“FPSO”) productline; one of the fastest-growing
areas of the offshore market.
However, we believe that the shares
of National Oilwell are fairly valued at current levels,
considering the sensitivity of the business to gas/oil price
volatility, as well as exploration and production spending
patterns, costs, geo-political risks, competition and the advent of
new technologies.
Another prominent energy service
firm, Cameron International Corporation (CAM) will
also report its fourth quarter earnings tomorrow.
CAMERON INTL (CAM): Free Stock Analysis Report
NATL OILWELL VR (NOV): Free Stock Analysis Report
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