On Jul 6, Zacks Investment Research upgraded Newpark Resources Inc. (NR) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The product and service provider to the oil and gas exploration industry delivered positive earnings surprises in three out of the last four quarters with an average beat of 3.8%.
With the international drilling market heating up, Newpark Resources has succeeded in winning quite a few contracts, thanks to its quality of products and services. In Jun 2013, Newpark Resources opened a state-of-the-art Laboratory Facility in Katy, Texas which will further ensure the supply of technically advanced products to its clients.
The company is scheduled to release its second quarter earnings in the latter half of this month. Newpark Resources’ performance during the quarter indicates that it will again beat expectations this quarter.
In Apr 2013, Newpark Resources received a two-year contract from a unit of TOTAL S.A. (TOT) to provide drilling fluids and related services for a series of wells planned in the Campos Basin. The company won another contract from an oil major to supply drilling fluids and related services for a series of wells to be drilled in the Black Sea.
In May 2013, Newpark Resources received a contract from the Kuwait Oil Company to provide drilling fluids and related services for land operation. This contract can generate $75 million for the company, depending upon the activity of its Kuwaiti counterpart.
These contracts show a steady demand for its products in both inland and offshore operations. In addition, consistent performance from the company enables it to reward its shareholders. The board of directors has again approved a $50 million share repurchase program for 2013 following the $50 million repurchased in 2012.
The Zacks Consensus Estimate for 2013 and 2014 are 81 cents and 99 cents per share respectively. This reflects year-over-year growth of 22.35% and 22.91% in 2013 and 2014 respectively.
Besides Newpark Resources, other operators in the sector having a favorable Zacks Rank and are Exterran Partners, L.P. (EXLP) and Dawson Geophysical Company (DWSN). Both these companies currently retain a Zacks Rank #1 (Strong Buy).
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