Looking Abroad After a Mixed Quarter Weatherford (WFT:NYSE) reported its quarter this morning; the company missed on the earnings line but beat on revenues. Earnings came in at 2 cents a share vs. the 11 cents First Call consensus, but Weatherford posted stronger- than-expected revenue of $2.43 billion vs. $2.28 billion. Revenues were stronger than expected in the company's international division and weaker in North America, which is consistent with what Schlumberger (SLB:NYSE) and Halliburton (HAL:NYSE) have already reported. I'll be listening to what Weatherford is saying about pricing in North America, especially in the face of a 40% decline in the rig count -- both Schlumberger and Halliburton said pricing was improving in this region, and Weatherford indicated it was firming on its third-quarter call. I don't own this for its North American exposure, but rather its massive growth opportunities outside the U.S., and that segment didn't disappoint, posting a 16% increase led by strength in Latin America (revenue grew 59% year over year and 18% sequentially), Europe/West Africa (grew 28% from last year and 18% from last quarter), and Iraq, China and Malaysia.
The call is at 8:30 a.m. EST, and I will listen to what the management has to say about margins, pricing and its general outlook for growth. But the key to the story is its international operations, and at first blush I am pleased with the above-average growth in this division and the future opportunities that will enable it to grow three times as fast as its competitors.
Added just now......Just got the alert
the growth story remains intact and the best in the group. Also, the company generated $95 million in free cash flow in the quarter, and management again stressed no need for a capital raise. At the current price, the stock trades at 11.6 times fiscal 2011 earnings (the recovery year), 6.3 times price-to-cash-flow and 6.7 times EV/EBITDA. This is a meaningful discount (20%-30%) to its peers, and a lot of the bad news is in the shares.
After my trade I will own 4,000 shares or 2.21% of my portfolio.