McDermott International (NYSE:MDR)

This is a stock that the mutuals will continue to purchase. I see it as taking a huge dip, however, in the near future, which may offer good buying opportunities, even though it is expensive.

RR buy rec

Excellent business for the next few years atleast. Enjoy the ride.

secular growth with oil and gas construction and power systems construction being growth drivers....increasing earnings based upon revenue growth....earnings will continue to drive higher equity prices.

In this time for looking for alternative fuels, it may time to look back to Nuclear. MDR is a major player in this industry and I see a slow but steady growth to this company's business.

Streetwalker
Five Cheap Growth Stocks
Forbes.com staff 01.05.07, 6:00 AM ET

The shares of these five companies look reasonably priced relative to expectations for profit growth.

The measure here is price-to-earnings-growth ratio, calculated by dividing a stock’s estimated price-to-earnings ratio for the next 12 months by its projected long-term earnings growth rate. These stocks have PEGs below 1.0, a sign that they might be bargains. All these companies are profitable and have generated positive free cash flow (net income plus depreciation less capital expenditures) over the last 12 months.

AP
Lukoil Awards McDermott Caspian Contract
Friday January 26, 1:13 pm ET
Russia's Top Oil Producer Lukoil Awards McDermott Subsidiary Contract for Caspian Sea Pipeline

Under the contract, McDermott Caspian Contractors will lay a 36-mile pipeline to Lukoil's Yury Korchagin oil and gas field, located in the northwestern, Russian section of the sea, the company said.

"The volume of construction work in Russia's oil and gas sector is gathering pace and we are proud to be working with Lukoil on this world-class project," Dan Houser, president and general manager for the company's Caspian operations said in a statement.

McDermott did not say how much the pipeline project would cost. The RIA-Novosti news agency reported that the entire project to develop the field, including the pipeline, would cost $700 million.

The field is due to come onstream in 2008 with annual capacity of 80,000 barrels per day and 10 billion cubic meters of gas per year, RIA-Novosti said.

The Caspian Sea has some of the largest oil and gas fields in the former Soviet Union. Most are located in the section of the sea controlled by Azerbaijan, south of Russia.

Utilities are investing in new power generation plants, nuclear is ramping up, and once congress will be approveing new offshore reserves development - all play to MDR's 3 business units

RIG

strong diversified operations

McDermott's three operating segments contributed to an increase in revenues so far this year. The three segments of McDermott include,

Offshore Oil and Gas Construction - includes J Ray McDermott which provides construction services for the oil industry.

Power Generation Systems - includes The Babcock & Wilcox Company which manufactures and operates electrical and steam generating plants.

Government Operations - includes BWX Technologies, Inc. and subsidiaries, which provides fuel and equipment to the U.S. Navy's nuclear fleet and manages U.S. Government - owned facilities.

McDermott announced on September 8,2006 it was conducting a strategic realignment of it's businesses operating within the power industry. Effective January 1, 2007 McDermott will consolidate BWX Technologies and Babcock & Wilcox into a single operating entity as The Babcock & Wilcox Companies.

Earnings have been strong at McDermott, backlogs are at record levels, bids outstanding remain robust and cash flow has enabled MDR to retire substantially all of its funded debt. Offshore Oil & Gas Construction Construction revenues in this segment were $398.8 million in Q2 of 2006, compared to $349.7 million for Q2 of 2005. The year to year increase in revenues resulted from increased activity in the Middle East region and worldwide marine projects. Segment income for 2006 2nd quarter was $63.9 million, compared to $30.2 million in Q2 of 2005. Major items in Q2 of 2006 were projects in the Middle East and Caspian regions. On June 30, 2006 the backlog for J.Ray McDermott was $3.2 billion, compared with a backlog of $0.9 billion on June 30, 2005.

Power Generation Systems for the 2nd quarter of 2006 were $488.7 million. During 2005, Babcock & Wilcox was deconsolidated and therefore there were no revenues reported for the 2nd quarter of 2005. Segment income for Q2 of 2006 was $25.2 million, compared to $0.3 million in 2005 2nd quarter. The increase was due to reconsolidation of Babcock & Wilcox beginning in the 1st quarter of 06. On June 30, 2006 B&W's backlog was $3.1 billion.

Government Operations revenues were $163.5 million for Q2 of 2006, compared to $159.9 million for Q2 of 2005. The increase was due to higher volumes in the manufacture of nuclear components for U.S. Government programs. Segment income for 2006 2nd quarter was $30.8 billion, compared to $29.7 million in the 2nd quarter of 2005. The increase was due to an increase in the manufacture of fuel for research test reactors and fuel for commercial reactors. On June 30, 2006 the backlog was $1.5 billion, compared to $1.6 billion on June 30, 2005.

Some financials for MDR include,

Trailing P/E 23.68
Forward P/E 14.17
Revenue $2.60 billion
Revenue per Share $24.53
Quarterly Revenue Growth 105.80%
EBITDA 369.98 million
Quarterly Earnings Growth -43.89%
Total Cash $674.9 million
Total Debt $27.75 million

2006 Q2 Net Income $45.4 million
2005 Q2 Net Income $80.9 million

2006 Q2 Revenue $1,048.9 million
2005 Q2 Revenue $509.7 million

McDermott is a long-term buy and hold for me!

missed qtr due to eliminating long term debt; has 18 months of back ordered work, jray and b&w going great. we aren't going to build anymore power plants in the US? b&w leading mfg'er of power plant boilers.

Energy!

As you can tell with my BP pick, I don't think this current reprieve in the energy markets is going to last long. I think it is seasonal and I think there is too much political instability, too much demand on energy, and I think we are going to see weather, politics, demand, and other factors drive energy up. Besides, over the longer term, I think demand is going to drive more investment in infrastructure... especially nuclear (nukular, for el presidente) and refinery capacity! Guess who is going to mop up on that one??? BOOOYAH!

MDR has excellent management and is really getting this company moving in the right direction.

Backlog increasing & paying off debt

the world is growing...MDR is a play on the globla infrastructure story.

multi industry, leader in its field

Energy infrastructure company that has learned the business ..