ENSCO International, Inc. (ESV)

The company has a P/E (TTM) earnins under 6, very strong earnings with no losses, 5 year growth, a small dividend, an S&P rank of B+, A 26% debt to working capital ratio, a current ratio of 3.38 and a tangible book value of 1.27.

I think this is a good value stock with solid earnings. I should have looked at this stock a long time ago, but I'll try it now as it still looks promising.

oil drillers the place to be good profits etc benefits from dollar weekness low pe high growth rate atw my favorite

10 x forward P/E. Good cash flows, solid balance sheet with huge cash cushion; excellent P/S and P/B ratios relative to profit margin and return on equity, respectively.

strong 5 year ROE& profit margin improvement and still at reasonable PE ratios

1/2 Intrinsic Value is $57.96

Following StockBoy2 who maintains an interesting website called wallstreetbean.com. Ensco International, Inc. is an offshore contract driller for the oil and gas industry. I am reassured by the fact that bigfatbear and JakilatheHun recently picked this stock to outperform. The company's longterm return on equity is approximately 12% and sales growth is good. The balance sheet is sound. Despite these facts, the company is selling for book value. I think it deserves to trade around 2 times book value, which is close to its longterm average.

Drill your way to hefty gains with this Texas stalwart. With minimal debt, huge profit margins and $882mil in cash, these guys take their coffee black. No cream, no sugar...just oil. Wallstreetbean.com

Low-cost producer, high earnings, high cash, and low debt all make ESV a green-thumber's dream. Easy outperform from here, especially with a pricey market.

My ONLY beef with ESV is that the long-term technicals show a fair amount of unpredictability and volatility (though are still long-term bullish if you ask me).

Here's the chart: http://tinyurl.com/kms62t

Just look at it! From $50 to $0.50, then back up to $12, then back down to $2, then up to $40, then back down to $9, then $37, then $18, then a nice 7 year run up to $80. Then $24 post-crash. Now $38.

The following years had ESV selling higher than it currently does: 2001, 2000, 1997, and 1981. Combined with the earnings and profitability potential, I think ESV has proven itself volatile in best way possible: long-term bullish.

Sure, the short term may beat it up, but you'd be extremely lucky to get it under $34 again. I will probably research more and buy with some real $$.

Thanks go to Jakila!

This is my #1 stock pick for August '09. I initially recommended this at $30, but never got around to writing a pitch until now. Even if it's creeped up a little bit to the $38 pricepoint, this still looks like an incredible bargain to me.

What makes ESV look particularly enticing is their low debt, great history of profitability, and position in an industry with strong growth potential. You’d think with that profile, the stock would be selling at a sizable premium, but that’s simply not the case.

Net tangible assets are around $33 per share and the stock has been selling in the $35 - $40 range. Now, consider their earnings: $8.11, $6.73, and $5.04 per share for FY ’08, ’07, and ’06 respectively. Based on FY ’08 earnings, the stock could easily be worth $120+. Indeed, ESV sold for around $80 in early ’08. Given the precipitous drop, you’d think earnings had dived off a cliff, except, they really haven’t. Sure, they’ve been affected by the downturn and drop in oil prices like everyone else in the industry, but they still managed scrape out earnings of $1.41 per share for Q2 for FY ’09, and $2.97 per share for the first half of ’09. If you annualize the later figure, that comes out to $5.94 per share --- which would suggest the stock should still be selling over $100.

It's not as if cash flows have been poor either. Operating cash flows have been very impressive, normally exceeding earnings. Free cash flows (FCF) are not quite as plentiful since Ensco continues to expand its operations; however, ESV has managed to stay FCF-positive throughout most of the past five years.

Maybe the market is still somewhat sour on oil, but given the high dependence on oil in the US, and increasing dependence in China and India, I still believe offshore oil related services are a winner in the long-term. Ensco looks like a real bargain at these prices. I am long on this in real life and I expect to hold it for many years.

Selling at just over book value, TTM EPS is nearly 20% of stock price for a very high earnings yield, current ratio in excess of 3...all indicative of a great value. And somehone I can't see oil staying at current levels when global economic conditions begin to turn around.

Giddy cash flow. Iron clad balance sheet. Rapidly increasing shareholder equity. Tiny PE ratio. Expansion into deepwater drilling, which isn't going anywhere thanks to a new..much higher base on oil prices due to the depletion of cheaply exploited oil fields and continuing high global demand.

I would rate this outperform even if it traded for 2x it's current price. People are crazy!

Considering Book value, earnings, and market cap...this should beat the market in 5 years.

Found this through the CAPS screener
- Near tangible book value Market cap.
- Single digit PE
- Has remained profitable despite depressed oil prices
- 5 Star rating
- Tenured management

we still need a lot of oil

I am betting on oil/energy right now.

The analysis presented is based on a current price of $32.15.

Except for 2001 to 2002, the EPS has generally been growing; for the 2001-2008 period, the compounded annual growth (CAGR) has been 27%. The return on equity (ROE) has been particularly strong since 2006, exceeding 20% in each of those years; these are the same years that free cash flow has consistently been positive.

Before I look at the valuations, I look at three indicators of financial safety. For this stock, all three are quite good. The Altman Z is 5.0; below 1.8 is risky, above 3 is the safe range. The Piotroski F is 6; 2 or below indicates caution, while 8 or 9 indicates that the stock is expected to rise within the next year. The Sloan accrual is -3.73; 5 or higher is high risk, while -5 or lower is excellent.

I use more than one valuation method to gauge intrinsic value; the first three all provide a good margin of safety (MOS). The first three are standards in the valuation literature. The estimate based on Graham’s formula was $236 (86% MOS). The Earnings Power Value (value of the firm) was estimated, on a per share bases, to be $178 (82% MOS). The Discounted Cash Flow estimate valued the stock at $61 (47% MOS).

The last two were based on a spreadsheet found on the AAII website; these are designed to mimic Buffett’s valuation methodology. One is based on projecting EPS growth 10 years into the future based on past EPS growth; I discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings (including dividends when applicable) return of 15%. Based on this method the target purchase needs to be below $41, and at the current price there is an 22% MOS.

The second is based on estimating EPS growth through the sustainable growth rate. The per-share projected book value is estimated by taking the previous year’s book value, adding EPS and subtracting dividends (when applicable). The projected EPS is estimated by multiplying the projected book value by the average Return on Equity, and the projected dividend is estimated by multiplying the projected EPS by the average payout ratio. I then discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings return of 15%. Based on this method the target purchase needs to be below $65, and at the current price there is an 51% MOS.

To ascertain that the price is attractive to me, I take one more thing into consideration. At the current price, would I expect an immediate 15% return on my investment (ROI) based on earnings and dividends? In this, the EPS represents about 24.2% of the share price by itself, so the 0.3% dividend yield is not needed. However, if the dividend had been needed to achieve the desired 15%, I would have considered the risk that the dividend may be cut. This risk is assessed by evaluating several factors (Current Price, Current Yield, Current Payout Factor, Gross Margin, Operating Margin, Financial Leverage, EPS Growth). Based on this assessment, there is a moderate (most recent fiscal year) to high (TTM) risk that the dividend may be cut.

Although ESV does not have a long history of good results, the potential return is quite strong given the risks involved. I think that the stock is a strong speculative buy.

Very little debt and solid cash flow. Price of oil rising on weakening American dollar.

Upgraded Today - 5-22-09. Ofcourse long term the Oil related stocks would do well. Excellent fundamentals too.

This is under priced in a valuable market sector. They have very good management, a great balance sheet, high margins, and a high return on equity. Their intrinsic value is around $8 billion without growth.