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Market Sentiment Around Loss-Making Oil States International, Inc. (NYSE:OIS)

Mary Ramos

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Oil States International, Inc.’s (NYSE:OIS): Oil States International, Inc., through its subsidiaries, provides oilfield products and services for the drilling, completion, subsea, production, and infrastructure sectors of the oil and gas industry worldwide. The US$1.1b market-cap company announced a latest loss of -US$19.1m on 31 December 2018 for its most recent financial year result. Many investors are wondering the rate at which OIS will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for OIS.

Check out our latest analysis for Oil States International

According to the 14 industry analysts covering OIS, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$33m in 2020. So, OIS is predicted to breakeven approximately a couple of months from now! In order to meet this breakeven date, I calculated the rate at which OIS must grow year-on-year. It turns out an average annual growth rate of 104% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, OIS may become profitable much later than analysts predict.

NYSE:OIS Past and Future Earnings, February 22nd 2019

Underlying developments driving OIS’s growth isn’t the focus of this broad overview, but, bear in mind that typically an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing I’d like to point out is that OIS has managed its capital judiciously, with debt making up 23% of equity. This means that OIS has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of OIS to cover in one brief article, but the key fundamentals for the company can all be found in one place – OIS’s company page on Simply Wall St. I’ve also compiled a list of key factors you should look at:

  1. Valuation: What is OIS worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether OIS is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Oil States International’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.