Stocks & Investing
Stocks and Investing
Stocks and Investing
Tue, April 19, 2011
Mon, April 18, 2011 NBR, ESV, HP, RDC, PDE, KEG, Oil and Gas - Drilling Stocks Overvalued
April 18, 2011/ M2 PRESSWIRE / BUYINS.NET / http://www.squeezetrigger.com is monitoring the Oil and Gas - Drilling sector and these stocks are the most undervalued as of today. NABORS INDUSTRIES LTD (NYSE:NBR), ENSCO PLC-SPON ADR (NYSE:ESV), HELMERICH & PAYNE (NYSE:HP), ROWAN COMPANIES INC (NYSE:RDC), PRIDE INTERNATIONAL INC (NYSE:PDE), KEY ENERGY SERVICES INC (NYSE:KEG) are all expected to go Down as they are Overvalued according to industry standard valuation metrics. The valuation model employs a three-factor approach to stock valuation using fundamental variables--the company's trailing 12-month Earnings-Per-Share (EPS), the analyst consensus estimate of the company's forecasted 12-month EPS, and the 30-year Treasury yield--to create a highly accurate reflection of a company's fair value.
The chart below displays the projected Fair Value and Valuation discount/premium of the most undervalued stocks in the highlighted industry group:
Symbol Company Name Last Close Fair Value Valuation Industry
NBR NABORS INDUSTRIES LTD $31.34 $22.12 41.70% Overvalued Oil and Gas - Drilling
ESV ENSCO PLC-SPON ADR $55.77 $43.65 27.80% Overvalued Oil and Gas - Drilling
HP HELMERICH & PAYNE $67.84 $40.00 69.60% Overvalued Oil and Gas - Drilling
RDC ROWAN COMPANIES INC $40.73 $30.00 35.80% Overvalued Oil and Gas - Drilling
PDE PRIDE INTERNATIONAL INC $42.04 $30.16 39.40% Overvalued Oil and Gas - Drilling
KEG KEY ENERGY SERVICES INC $15.07 $12.35 22.00% Overvalued Oil and Gas - Drilling
Here are some of the variables that are utilized when calculating the Fair Market Valuation of a stock: Long-run EPS growth rate, Duration of Business-growth-cycle, Volatility of EPS growth rate, Systematic or beta risk of the firm, Correlation between the firm's EPS and the interest rate environment, EPS growth volatility, Dividend payout ratio, Buffer earnings, Interest rate related criteria: Interest rate (30 year yield) long-run level, Duration of interest rate cycle, Interest rate volatility. The Fair Market Valuation uses 12-month historic and forecasted EPS values and the current 30-year treasury yield as primary determinants. When calculating risk/return values such as the Sharpe ratio, the historic periods used are five years.
Some expected results of the Valuation Model are: the valuation of a stock increases in a declining interest rate environment. Increasing current and/or projected EPS will produce a higher Valuation. While long-term EPS growth would produce a corresponding long-term Valuation increase, concomitant long-term interest rate increases would offset EPS growth and depress the Valuation. The shorter a company's own business cycle, the higher its stock Valuation will be.
NABORS INDUSTRIES LTD (NYSE:NBR) - Nabors Industries Ltd. operates as a land drilling contractor worldwide. It conducts oil, gas, and geothermal land drilling operations in the United States Lower 48 states, Alaska, Canada, South America, Mexico, the Caribbean, the Middle East, the Far East, Russia, and Africa. The company also operates as a land well-servicing and workover contractor in the United States and Canada. In addition, Nabors Industries provides offshore platform workover and drilling rigs that offer well-servicing, workover, and drilling services. Further, the company offers a range of ancillary well-site services, including engineering, transportation, construction, maintenance, well logging, directional drilling, rig instrumentation, data collection, and other support services; and logistics services for onshore drilling in Canada using helicopters and fixed-winged aircraft. Additionally, it manufactures and leases or sells top drives for a range of drilling applications, directional drilling systems, rig instrumentation and data collection equipment, pipeline handling equipment, and rig reporting software. Nabors Industries also invests in oil and gas exploration, development, and production activities. As of December 31, 2009, its fleet consisted of approximately 542 land drilling rigs, 558 domestic and 172 international land workover and well-servicing rigs, 40 offshore platform rigs, 13 jack-up units, and 3 barge rigs, as well as various trucks and fluid hauling vehicles. The company was founded in 1968 and is based in Hamilton, Bermuda.
ENSCO PLC-SPON ADR (NYSE:ESV) - Ensco plc, together with its subsidiaries, provides offshore contract drilling services to the oil and gas industry. The company engages in the drilling of offshore oil and natural gas wells by providing its drilling rigs and crews under contracts with international, government-owned, and independent oil and gas companies. As of February 15, 2010, it owned and operated 42 jackup rigs, 4 ultra-deepwater semisubmersible rigs, and 1 barge rig. The company also has 4 ultra-deepwater semisubmersible rigs under construction. It operates in Asia, the Middle East, Australia, New Zealand, Europe, Africa, and North and South America. The company was formerly known as Ensco International plc and changed its name to Ensco plc in March 2010. Ensco plc was founded in 1975 and is based in London, the United Kingdom.
HELMERICH & PAYNE (NYSE:HP) - Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells in the United States and internationally. The company provides drilling rigs, equipment, personnel, and camps on a contract basis to explore for and develop oil and gas from onshore areas and from fixed platforms, tension-leg platforms, and spars in offshore areas. It conducts domestic land drilling primarily in Oklahoma, California, Texas, Wyoming, Colorado, Louisiana, Mississippi, Pennsylvania, Utah, Arkansas, New Mexico, and North Dakota; and offshore drilling in the Gulf of Mexico, offshore of California, Trinidad, and Equatorial Guinea. As of September 30, 2009, the company had 201 land drilling rigs in the United States; 9 offshore platform rigs; and international land rigs, including 1 in Venezuela, 6 in Colombia, 4 in Ecuador, 9 in Argentina, 1 in Tunisia, and 6 rigs in Mexico. In addition, Helmerich & Payne engages in the ownership, development, and operation of commercial real estate properties, as well as the research and development of rotary steerable technology. Its property portfolio includes a shopping center and multi-tenant industrial warehouse properties, as well as approximately 210 acres of undeveloped real estate land. The company was founded in 1920 and is based in Tulsa, Oklahoma.
ROWAN COMPANIES INC (NYSE:RDC) - Rowan Companies, Inc. provides a range of onshore and offshore contract drilling services in the United States and internationally. As of December 31, 2009, it provided contract drilling services through a fleet of 23 self-elevating mobile offshore drilling platforms and 29 deep-well land drilling rigs. The company also designs and manufactures drilling equipment in a range of sizes, including mud pumps, top drives, draw-works, rotary tables, and electrical components, such as variable-speed motors and drives for the offshore and onshore oil and gas drilling industry. In addition, it manufactures heavy equipment, including large-wheeled front-end loaders, diesel-electric powered log stackers, and steel plate products. The company was founded in 1923 and is headquartered in Houston, Texas.
PRIDE INTERNATIONAL INC (NYSE:PDE) - Pride International, Inc. provides offshore contract drilling services to oil and natural gas exploration and production companies. It offers services through the use of mobile offshore drilling rigs in the United States and international waters. As of February 19, 2010, the company operated a fleet of 23 rigs consisting of 2 deepwater drillships, 12 semisubmersible rigs, 7 jackups, and 2 managed deepwater drilling rigs. It also offers rig management services on various rigs, including technical drilling assistance, personnel, repair and maintenance, and drilling operation management services. The company was founded in 1966 and is based in Houston, Texas.
KEY ENERGY SERVICES INC (NYSE:KEG) - Key Energy Services, Inc., together with its subsidiaries, operates as an onshore rig-based well servicing contractor. It operates in two segments, Well Servicing and Production Services. The Well Servicing segment offers rig-based services, which include the maintenance, workover, and recompletion of existing oil and gas wells; completion of newly-drilled wells; and plugging and abandonment of wells at the end of their lives. This segment also provides fluid management services, including vacuum truck services, fluid transportation services, and disposal services to collect, transport, and dispose saltwater, as well as supplies frac tanks, which are used for temporary storage of fluids in conjunction with the fluid hauling operations. In addition, it offers equipment trucks; and a fleet of hot oilers for pumping heated fluids that are used to clear soluble restrictions in a well bore. As of December 31, 2009, this segment operated a fleet of 743 rigs. The Production Services segment provides pressure pumping services, which comprise fracturing, nitrogen, acidizing, cementing, and coiled tubing services to oil and natural gas producers, as well as drill pipe, tubulars, handling tools, pressure-controlled equipment, power swivels, and foam air units to recover lost or stuck equipment in the well bore. This segment also offers wireline services that consist of perforating, completion logging, production logging, and casing integrity services, as well as oilfield service equipment controls, data acquisition, and digital information flow services. The company was formerly known as Key Energy Group, Inc. and changed its name to Key Energy Services, Inc. in 1998. Key Energy Services, Inc. was founded in 1977 and is based in Houston, Texas.
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