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Ensco plc Message Board

  • ryan5542002 ryan5542002 Oct 17, 2007 7:49 PM Flag

    What are they gonna do with the cash????

    Just read Lehman's downgrade today.

    First of all, I think Miss Sedita, Lehman's ANALyst is fair, and I respect her opinion.

    Her lowering of estimates was based on two premises; first, she is assumming NA NG prices will remain weak, and as a result utilization and dayrates in the shallow water Gulf will continue to suffer.

    Second, she is assumming some softening of international dayrates as well - more softening then she had modeled prior to today's downgrade.

    Both of her premises are reasonable, and may very well come to fruition, but here's the thing - EVEN WITH TODAY'S DOWNGRADE, MISS SEDITA IS MODELING 19.00 IN DILUTED CASH FLOW PER SHARE FOR 2008 AND 2009 COMBINED.

    Sorry for the CAPS, but come on. Are my eyes bad or did ESV not close circa 55 today????????????

    19 dollars is 35% of ESV's current market cap.

    So again, I ask, even if Miss Sedita's nefarious predictions prove true, WHAT ARE THEY GONNA DO WITH ALL THE CASH????????????????????

    Austin asked earlier what can ESV management do - well one thing is oultline in detail what they are going to do with the cash.

    This valuation continues to be a joke - there clearly is fear that ESV and the like are well on their way to becoming the next homebuilding sector.

    Miss Sedit's new estiamtes for 2008 and 2009 are 7.72 and 8.08 respectively.

    In an S&P 500 trading at 15x 2008 estimates, doesn't ESV deserve at least a 10 multiple, or 40% discout to the rest of the index????

    That's 50% higher than current levels, and its conservative.

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Well stated. I have called for a PE of 10 for a long time. The current expectations hold as long as oil is above 40$/brl. Now that its over 80$ with tight supplies listed as the culprit, isn't it time to start predicting higher day-rates for the world's fleet. OK, those that are based on NG in GOM may continue to be weak but longer term the disconnect between NG and Oil can not be sustained. So this is not like housing a couple of years ago. Demand for oil rigs is not going to drop out of the sky, like housing. We do not have oil rig speculators over building like there were in housing. Rig have lifetime and therefore have to be replaced unlike housing. Can anyone explain why ESV is under 70 right now? Is long term demand under a threat that we can't see?

    • They should just keep buying back shares while they are cheap. This will keep forcing the price up, and once the market finally sees this stock for what it is, we should go much higher.

      I am 100% against a dividend, I am 100% for share buybacks

 
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