Oil States International, Inc. - Momentum

Oil States International, Inc. (OIS) recently hit a new all-time high at $65.98 as crude jumps above $90 on a bullish outlook for 2011. With a Q3 earnings surprise of 14% and a 33% next-year growth projection, this Zacks #1 rank stock provides a nice boost to

Company Description

Oil States International, Inc., through its subsidiaries, provides specialty products and services to oil and gas companies worldwide. The company was founded in 1995 and has a market cap of $3.29 billion.

Energy stocks are hot right now as the global economy shows signs of strength heading into 2011. That dynamic lifted OIS to strong Q3 results in early November that came in ahead of expectations.

Third-Quarter Results

Revenue for the period was up 29% from last year to $588 million. Earnings also looked good at 88 cents, 14% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 24% the last four quarters.

The good results were driven by Oil States strong showing in North America, with every one of the company's segments except off-shore drilling showing gains from last year. Its biggest segment, Tubular Services, saw sales increase 62% from last year to $232.5 million.

Strong Financial Position

Oil States also has a strong balance sheet, with cash and equivalents up $77 million from last year to $138 million. Its total debt is down $23 million from last year to $170 million.

Estimates

We saw some pretty decent movement in estimates off the good quarter, with the current year up 12 cents to $3.25 while the next-year estimate added 34 cents to $4.34, a bullish 33% growth projection.

Valuation

But in spite of the gains, this stock still has value, trading with a forward P/E of 20X against the industry average of 23X.

12-Month Chart

On the chart, OIS has been trending higher since early September, with shares getting an extra boost on the good quarter to recently hit a new all-time high. The stochastic below the chart is signaling that shares remain safely away from over-sold territory. Look for support from the trend line on any weakness, take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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