On Jun 13, Zacks Investment Research upgraded oilfield service company Core Laboratories N.V. (CLB) to Zacks Rank #2 (Buy).
Why the Upgrade?
Core Lab has been witnessing rising earnings estimates following impressive first quarter 2013 results that were backed by global deepwater hydrocarbon developments. The company’s consistent emphasis on international crude-oil developments (mainly in deepwater), its global high-grading unconventional crude oil and natural gas opportunities as well as improvements in North American operations complemented the results.
On Apr 17, Core Lab reported earnings per share (EPS) of $1.22, surpassing the Zacks Consensus Estimate of $1.15. Comparing year over year, EPS increased 8.0% excluding one-time items.
With respect to the earnings trend, Core Lab delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 2.87%. Moreover, the company has been gaining shareholders’ confidence by returning wealth via share repurchases and dividend hikes. It increased its quarterly common stock dividend by 14.2% to 32 cents per share ($1.25 per share annualized) in Jan 2013.
The long-term expected earnings and sales growth projections of 18.0% and 7.48%, respectively, are also fairly impressive.
Based on Core Lab’s consistency in earnings, attractive fundamentals and a positive outlook, the Zacks Consensus Estimate for the second quarter of 2013 has increased 4.0% to $1.31 per share over the last 60 days. For 2013, the Zacks Consensus Estimate increased 1.6% over the same time frame to $5.22 per share.
We believe that Core Labs’ technology-heavy portfolio of proprietary products and services gives it the opportunity to optimize production from new and existing fields. The company remains well positioned onshore U.S. given its strong presence in the emerging shale plays, where activity levels are not affected by the ongoing financial turmoil and commodity-price uncertainty.
Other stocks to consider
In addition to Core Lab, there are other firms in the oilfield service industry that are expected to perform well in the coming one to three months. These include Dawson Geophysical Company (DWSN), Exterran Partners L.P. (EXLP) and Exterran Holdings Inc. (EXH). All these stocks carry a Zacks Rank #1 (Strong Buy).
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