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Ensco plc Message Board

  • ccrrpawd ccrrpawd Mar 13, 2013 10:53 AM Flag

    Undervalued

    ESV has an ongoing P/E of 11.04, which indicates that it is undervalued. The technical indicator at stoxline website shows a buy with the 72.47 target price in six months.

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    • your statement is not accurate...a pe in and of itself does not indicate undervalue. Now why I agree with your conclusion that it is undervalued, I cant see how you got there by merely stating a PE #. Apple is less, others are lower. Companies typically are warranted a larger PE if there is higher growth. Thus if you believed growth rates would be 15%, I would apply 15* this years earnings, since we have not released Q1 yet. Mid estimates, per Yahoo, for 41 analyst is 6.71. Growth for this year is expected to be 22% and next year like 16%. There seems to be more oil and thus China growth will be a factor in maintaining higher oil prices or we shall see a slump, which has occurred and ESV has followed downward. Regardless, I think the 15 multiple is warranted, but lets say growth slows further and even an 13 is warranted. Then is is an $87 stock. Should be already, not even in 6 months. I dont own enough to move it, only have 2000 shrs. Rode it up, got out and got back in at $58. For whatever reason this stock does not get the appropriate multiple, but even at 11 multiple it is a $73 stock, assuming the $6.71 is attained. Say $6.25 is over last years $5. 6.25 at 13 (conservative) is $80. So anyway I have looked at it, even being conservative and giving it a very low multiple, well below growth rate, this is a BUY. Factors to change this, would be EPS and future growth rate (company did note that expenses would increase as they recd addl orders--just watch this as a dip due to this fact, as earnings will be later when deployed, could provide a great buy opportunity in my opinion). Just my .02

      • 1 Reply to hounddog86zz
      • We are following the price of oil, but our rates dont depend on that. They are contractual. Longer term if oil does come down in price, ie supply higher than demand (which the reports today, say less is being used), then less drilling will occur. Would be interesting to have mgmts feelings on this. At what price oil must drop to influence new and renewed contract price by 10% lower?

    • obeythe27rulesofinvesting obeythe27rulesofinvesting Apr 9, 2013 11:01 PM Flag

      The simple way to value a stock is to divide the current stock price by the PEG ratio.
      This method assumes the earnings forecasts are reasonable.

 
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