Are They Really Superior?

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Superior Energy (NYSE: SPN) serves the drilling, completion, and production-related needs of oil and gas companies worldwide through a diversified portfolio of specialized oilfield services and equipment that are used throughout the economic life cycle of oil and gas wells.

 As an investor the first thing you should when evaluating any stock is to read the business summary and not only understand it, but accept it. Is this something you want invest in? Is it helping the world move forward? Is this helping the environment or not? There are numerous questions you can ask yourself just by reading the summary and not even glancing at the financials or stock performance.

With all that being said, Superior Energy Services recently received an upgrade by RBC Capital stating the company’s strong international growth. Anytime an investor sees positive news they should always investigate further and see not only is this true but how have they stacked up against their competitors and how will they compete going forward.

Do we have international growth?

Superior Energy Services is well known for having a very diversified business and it’s because of this they don’t have more than one segment (business) accounting for more than 20% of revenue. So the various products they have to offer have really taken off and are a driving force behind the international growth. A quick look at the Income Statement will show that revenue has increased each year since 2009 a very positive sign and over the past 6 months the stock has rebounded from its 52 week low and has posted returns close to 10%.

How do the competitors stack up? 

Direct Competitor Comparison

 

 

SPN

BHI

PKD

SLB

Industry

Market Cap:

3.52B

18.64B

612.99M

96.02B

348.63M

Employees:

6,500

58,800

2,317

113,000

1.60K

Qtrly Rev Growth (yoy):

1.20

0.03

-0.06

0.11

0.23

Revenue (ttm):

4.06B

21.40B

701.86M

43.86B

396.79M

Gross Margin (ttm):

0.43

0.20

0.42

0.21

0.31

EBITDA (ttm):

1.14B

4.07B

264.12M

11.09B

56.90M

Operating Margin (ttm):

0.17

0.12

0.21

0.17

0.10

Net Income (ttm):

343.37M

1.40B

-32.77M

5.53B

N/A

EPS (ttm):

2.35

3.21

-0.28

4.13

0.13

P/E (ttm):

9.50

13.23

N/A

17.51

12.92

PEG (5 yr expected):

0.47

1.10

1.17

0.96

0.93

P/S (ttm):

0.87

0.88

0.86

2.19

1.35

Looking at a few metrics we can see that Parker Drilling is not yet profitable and is the smallest of these competitors, because of this we will compare Schlumberger (NYSE: SLB) and Baker Hughes (NYSE: BHI) to Superior Energy. A quick glance shows Schlumberger having the largest market cap as well as the highest P/E and a PEG ratio below 1 which indicates that growth is to be expected and their shares are currently not fully valued. But they have the highest Price/Sales, the highest P/E and Superior has a gross margin twice as high as them.

They are the least expensive of these stocks with a 9.50x P/E and the lowest PEG ratio at 0.47 meaning they are the most undervalued of the stocks and there is a higher growth prospect then their other competitors.

What should we take away?

Given the increasing international growth and valuations that beat their most direct competition I don’t see why they can’t keep growing and improving. If there’s a gas and oil stock to be held I believe this to be one of them.


gomonkies23 has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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