Greenbrier makes new railroad freight cars in 3 manufacturing facilities in the United States and Mexico and marine barges at the U.S. location. It also builds new railroad freight cars for European customers through operations in Poland and subcontractor facilities throughout Europe.

The company also repairs and refurbishes freight cars and provides wheels and railcar parts at 38 locations in North America.

Greenbrier Beat By 37% in the Fiscal First Quarter of 2012

We've already heard from Greenbrier this earnings season. On Jan 6, the company reported fiscal first quarter results and blew by the Zacks Consensus Estimate by 13 cents.

Earnings per share were 48 cents compared to the consensus of 35 cents. This was a big turnaround compared to the year ago quarter in which the company lost 11 cents a share.

Revenue doubled to $398.2 million from $198.9 million in the first quarter of fiscal 2011. The manufacturing segment killed it in the quarter, with revenue soaring to $262.7 million from $85.4 million a year ago.

Manufacturing gross margin also jumped to 10.1% from 6.7% in the first quarter last year due to a more favorable product mix, efficiencies gained by higher production rates and higher volumes of leased railcar syndications.

Increasing Production

Greenbrier now has an impressive backlog of 13,300 units, as of Nov 30, 2011, with an estimated value of $1.1 billion. That is up from 8,100 units with an estimated value of $580 million as of Nov 30, 2010.

Given the strong demand, Greenbrier has been ramping up production in North America, increasing production rates on existing lines and re-opening previously idle production lines to meet demand.

It expects industry demand to remain solid, especially as the US energy market, a big customer of the rails, remains strong.

Analysts Loved the Report and Raised 2012 Estimates

The analysts have been bullish on this company for months so it's not surprising that the recent earnings report resulted in upward estimate revisions.

Since the report, 10 out of 12 estimates moved higher for fiscal 2012 pushing the Zacks Consensus up to $2.15 from $2.01.

That is huge earnings growth of 264% as the company made just 56 cents in all of fiscal 2011.

Greenbrier Is a Value Stock

There was a huge buying opportunity in the summer of 2011 when shares sold off in the general stock market meltdown.

Since then, shares have rebounded but haven't yet retaken the 2011 highs.

But even with the rebound, Greenbrier is cheap. Not only does it have a P/E of just 10.6, it has a price-to-book ratio of only 1.6. A P/B ratio under 3.0 usually indicates value.

Additionally, it has a low price-to-sales ratio of 0.4. A P/S under 1.0 can mean a company is undervalued.

With Greenbrier's big backlog, as long as the rail cycle continues to be solid, strong earnings in fiscal 2012 are nearly guaranteed.

But this is a value stock that is flying under the radar in an industry that is seeing high volume and growth. That's a magic combination.

This Week's Value Zacks Rank Buy Stocks

Specialty medical products are still in strong demand. The Cooper Companies, Inc. (COO) reported a record fiscal 2011 in December as revenue rose 15%. This Zacks #1 Rank (Strong Buy) has attractive valuations, with a forward P/E of 14.4. Read the full article.

Interline Brands, Inc. (IBI) has been able to grow its facility maintenance business even as it keeps one eye closely trained on economic trends. So far, this strategy is working as the company is expected to grow EPS by the double digits in 2012. This Zacks #1 Rank (Strong Buy) also is a value stock, with a really low price-to-sales ratio of just 0.5. Read the full article.

Energy Partners Limited (EPL) has been using acquisitions to expand production in the Gulf of Mexico. Higher crude prices and increased production has been a boom for earnings which are expected to rise in the double digits in 2012. This Zacks #1 Rank (Strong Buy) is not just a growth stock, but also has value with a forward P/E under 10. Read the full article.

Are the global specialty chemical makers still hot? We're about to find out as PolyOne Corporation (POL) is expected to report fourth quarter results on Feb 2. After a record 2010, this Zacks #1 Rank (Strong Buy) is still expected to see 15% earnings growth in 2011. But what will be the outlook for 2012? Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Thu, 26 Jan 2012 00:00:01 EST PolyOne Corporation (POL) is expected to report fourth quarter results on Feb 2. After a record 2010, this Zacks #1 Rank (Strong Buy) is still expected to see 15% earnings growth in 2011. But what will be the outlook for 2012?

PolyOne manufactures specialized polymer materials which are found in just about every industry from transportation, to colors used in packaging, to electronics and healthcare.

It provides services in natural rubber latex compounds, color additives, as well as screen printing inks and dyes, to name a few.

Acquisition of ColorMatrix Group Transforms the Business

On Dec 21, 2011, PolyOne announced that it had closed on the acquisition of ColorMatrix Group, a manufacturer of specialty additives, liquid colorant and dosing technologies with 162 patents and 107 pending applications.

PolyOne considered the acquisition to be a "game changer" because it expects to make more than 50% of its earnings from the specialty chemical platform in 2012, up from just 2% in 2005. It is expected to add 2 to 3 cents per share in earnings in 2012.

PolyOne paid $486 million using a combination of cash and a $300 million Term Loan B.

Expanding Production Capabilities in China

On Dec 19, the company announced that it now had production capabilities for its Stan-Tone specialty colorants portfolio in Shenzhen China. The portfolio had previously been produced exclusively in the United States.

The new capability was added due to global demand for colorant dispersions in thermoset polymers for building and construction in applications like sealants, caulks, flooring and indoor and outdoor decking.

Growth Slowed in the Third Quarter

On Oct 25, PolyOne reported third quarter results and met the Zacks Consensus Estimate of 26 cents. That is up 2 cents from the third quarter of 2010.

Revenue rose 8% to $735.8 million from $680.8 million.

The company experienced "headwinds" in the quarter, including slower global economic growth and a weaker euro. It expected the challenges to remain in the near term.

Analysts Expect Growth in 2012

PolyOne is expected to make $1.02 per share for 2011. That is earnings growth of 15.7% as the company made just 88 cents per share in 2010.

But all is not doom and gloom for 2012 either. 2 estimates out of 7 have moved higher in the last 30 days pushing the Zacks Consensus Estimate up to $1.12 from $1.11 per share.

That is further earnings growth of 9.7%.

We'll know more when the company reports its fourth quarter results which is expected to be on Feb 2.

Still a Value

PolyOne had been a value stock for most of 2011 even though shares had been at 10-year highs before the summer sell-off. While they've rebounded since then, they're still under prior highs.

PolyOne is also still a value.

In addition to having a P/E of 12.6, which is under the 15x level I use for value stocks, it also has a price-to-book ratio of 2.2.

A P/B ratio under 3.0 usually indicates value.

Another value indicator, the price-to-sales ratio, is also flashing value. PolyOne's P/S is just 0.5. A P/S ratio under 1.0 can mean a company is undervalued.

PolyOne has other strong fundamentals as well including a solid 1-year return on equity (ROE) of 16.8% which is above its peers at 14.3%.

The upcoming earnings report should provide clues into how much slowing, if any, is happening in the global economy, especially in the key Chinese market.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Wed, 25 Jan 2012 00:00:01 EST Energy Partners Limited (EPL) has been using acquisitions to expand production in the Gulf of Mexico. Higher crude prices and increased production has been a boom for earnings which are expected to rise in the double digits in 2012. This Zacks #1 Rank (Strong Buy) is not just a growth stock, but also has value with a forward P/E under 10.

Energy Partners is an independent oil and natural gas explorer with operations in the U.S. Gulf of Mexico shelf off the coast of Louisiana.

The company, based in New Orleans and Houston, is a smaller explorer, with a market cap of $630 million.

Expansion Through Acquisition

On Nov 18, the company closed on its $38.4 million acquisition of oil and natural gas assets in the shallow-water central Gulf of Mexico from a subsidiary of Stone Energy.

The transaction was a cash deal. Even after the acquisition, Energy Partners still had $50 million in cash on hand and another $250 million available under its senior secured credit facility.

The assets had proven reserves of about 1.3 million barrels of oil equivalent (boe) of which 96% were oil.

Fourth Quarter Production Guidance Raised

With the acquisition closed, Energy Partners updated its production guidance.

It has estimated 9,200 to 9,500 barrels per day with 82% being oil. The company's prior guidance called for 9,000 barrels per day.

Third Quarter Revenue Jumped 51%

On Nov 3, the company reported third quarter results which saw revenue soar 51% to $84.9 million.

The gain was due to a 44% increase in crude oil production and a 44% increase in the average realized crude oil prices compared with the year ago period.

The average realized price in the quarter was $107.99 per barrel for crude and $4.21 per thousand cubic feet of natural gas compared to just $75.02 per barrel of crude and $4.32 per Mcf of natural gas in the third quarter of 2010.

Oil production in the quarter was 97% crude and 3% natural gas liquids.

Energy Partners actually missed on the Zacks Consensus Estimate by 7 cents. Earnings per share were 28 cents compared to the consensus of 35 cents.

The company has an awful track record at beating the Zacks Consensus. It has missed each of the last 4 quarters.

It isn't missing simply because there is one estimate either. For 2012, there are 5 estimates.

2012 Zacks Consensus Estimate Rises

Despite the earnings misses, the analysts are still bullish on the earnings outlook for both 2011 and 2012.

After making just 25 cents in 2010, Energy Partners is expected to make $1.13 in 2011. That is earnings growth of 353.6%.

For 2012, further earnings growth is expected as 1 estimate has moved higher in the last month pushing the Zacks Consensus up to $1.72 from $1.65 in the last 60 days.

That is earnings growth of 52%.

Attractive Value Fundamentals

After a weak summer, shares rebounded along with crude prices. But they are still trading under the 2-year highs.

The company has attractive value characteristics including a forward P/E of just 9.2. That is well under its peers which average 15.8.

Energy Partners also has a price-to-book ratio of 1.3, which is under the 3.0 level which usually indicates value.

Energy Partners is next scheduled to report earnings on Mar 8. But with crude prices remaining elevated, the possibility of a year of double digit earnings growth in 2012 remains high.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Tue, 24 Jan 2012 00:00:01 EST Interline Brands, Inc. (IBI) has been able to grow its facility maintenance business even as it keeps one eye closely trained on economic trends. So far, this strategy is working as the company is expected to grow EPS by the double digits in 2012. This Zacks #1 Rank (Strong Buy) also is a value stock, with a really low price-to-sales ratio of just 0.5.

Interline Brands is a distributor and direct marketer of 20 brands of janitorial sanitation and maintenance, repair and operations products ("MRO") to facility maintenance professionals, professional contractors and distributors in North America, Central America and the Caribbean.

It offers same-day or next-day delivery on products in its catalogs.

Interline Brands Surprised By 5.7% in Q3

On Nov 4, Interline reported its third quarter results and surprised on the Zacks Consensus by 2 cents a share. Earnings were 37 cents per share compared to just 34 cents in the year ago quarter.

Sales rose 19.7% to $331.3 million from $276.8 million in the third quarter of 2010 but most of that was due to acquisitions. On an organic basis, sales increased 3.7%.

The professional contractor end-market was the hottest, rising 6.6% for the quarter. The largest segment, the facilities maintenance end market which made up 77% of total sales, rose 3.5% on an organic basis.

Double Digit Earnings Growth Expected in 2012

The company saw "stability" in its end-markets in the third quarter but was keeping a close eye on broader economic trends.

Analysts were also keeping a tight grip on estimate revisions.

The 2011 Zacks Consensus Estimate hasn't really budged in the last 3 months at $1.11 per share. It is EPS growth of 6.9% compared to 2010 where the company made $1.04.

But analysts have been getting a more bullish about the future. The 2012 Zacks Consensus Estimate rose 4 cents to $1.22 in the last month.

That is double digit earnings growth of 10.1%.

The company is scheduled to report fourth quarter results on Feb 24 so we'll have a better idea about whether the end markets are still stable.

Value Fundamentals

Shares sold off during last summer's sell-off but haven't made a full rebound.

But because of that, there is plenty of value in the shares.

In addition to a P/S under 1.0, which usually indicates a company is undervalued, it also has a price-to-book ratio of 1.1.

A P/B under 3.0 can mean that a company is a "value".

Interline Brand's forward P/E isn't exceptionally cheap at 14.1, but it is under the 15 cut-off I use for value stocks.

Interline Brands is a value stock with solid growth expected in 2012. Be sure to tune in in late February to see if the earnings picture is still as clear.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Mon, 23 Jan 2012 00:00:01 EST The Cooper Companies, Inc. (COO) reported a record fiscal 2011 in December as revenue rose 15%. This Zacks #1 Rank (Strong Buy) has attractive valuations, with a forward P/E of 14.4.

The Cooper Companies manufactures specialty healthcare products in two divisions: CooperVision and CooperSurgical.

CooperVision manufactures soft contact lenses and specializes in lenses for astigmatism, presbyopia and ocular dryness. The company produces monthly, 2-week and daily disposable contact lenses.

CooperSurgical manufactures medical devices, diagnostic products and surgical instruments mainly used by gynecologists and obstetricians.

Record Fourth Quarter and Fiscal Full Year 2011

On Dec 8, Cooper reported fiscal fourth quarter results and posted a record quarter to go along with a record full year. It blew by the Zacks Consensus Estimate by 25 cents. Earnings per share were $1.46 compared to the consensus of just $1.21. That was the 6th straight earnings surprise in a row.

Revenue in the quarter rose 15% to $360.9 million. Both CooperVision and CooperSurgical saw increases in the quarter of 15% and 14%, respectively.

Gross margin also improved to 62% from 60% a year ago due to an increase in the margin in CooperVision to 61% from 59%.

Fiscal 2012 Guidance

The company sees further earnings and revenue growth in fiscal 2012.

Revenue is expected to fall between $1.385 billion and $1.44 billion, up from 2011's revenue of $1.3 billion.

Earnings are forecast in the range of $4.80 to $5.00 per share.

Zacks Consensus Estimates Move Higher

Analysts are bullish on fiscal 2012 and even fiscal 2013.

The 2012 Zacks Consensus Estimate has risen a penny to $4.91 in the last 30 days as 2 out of 8 estimates has been revised higher.

This is further earnings growth of 9.1%.

The fiscal 2013 Zacks Consensus has also risen in prior month to $5.35 from $5.33. That is further earnings growth of 8.9%.

Still Has Value

Shares had been on a tear the last 2 years but sold off during the last summer's jitters.

They've rebounded a bit but the stock still remains a value.

In addition to a forward P/E under 15, which is my cut-off for value, Cooper also has a price-to-book ratio of 1.8. A P/B under 3.0 usually indicates "value."

Cooper had a hot fiscal 2011. Can it keep the momentum in 2012? We'll find out in February, as the company is scheduled to report fiscal first quarter results on Feb 23.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Fri, 20 Jan 2012 00:00:01 EST ScanSource, Inc. (SCSC) saw record fiscal first quarter sales in October, it also saw Europe weakening. Now, as this Zacks #2 Rank (Buy) is set to report second quarter results, will Europe be even more of a drag?

ScanSource distributes specialty technology products around the world in two segments: North America and International. The International segment includes Latin America, and Mexico, as well as Europe.

It distributes automatic identification and data capture (AIDC) and point-of-sale (POS) solutions through its ScanSources POS & Barcoding sales unit. Its Catalyst unit distributes voice, video and converged communications equipment.

Record Sales in the First Quarter of 2012

On Oct 27, ScanSource reported fiscal first quarter 2012 results which saw revenue hit a record $770.3 million, up 21.4% from the fiscal first quarter of 2011.

North America had another strong performance which compensated for the weakness in the European business. Excluding the acquisition of CDC Brasil, its international growth rate slowed to just 9% over the year ago period.

Earnings per share were 69 cents, which beat the Zacks Consensus Estimate by 5 cents. The company made just 58 cents in the first quarter a year ago.

Second Quarter Outlook

In October, the company wasn't looking for much growth in the second quarter.

Revenue was expected in the range of $755 million to $775 million, which would put it about where it was in the first quarter.

Similarly, earnings per share are forecast between 64 and 67 cents.

Analysts are more bullish than the company. The Zacks Consensus Estimate is calling for 69 cents, or 2 cents higher than the top end of the guidance range.

Double Digit Earnings Growth in Fiscal 2012

Analysts are still optimistic about the full fiscal year. 3 estimates have moved higher for 2012 in the last 30 days which has pushed the full year Zacks Consensus to $3.14 from $3.08 per share.

That is earnings growth of 15.3%.

ScanSource is a Value Stock

Shares sold off like the rest of the market in the summer of 2011 but have staged nearly a full turnaround.

But there is still value. The company is trading with a forward P/E of 13.8, which is under the 15x cut-off I use for value stocks.

ScanSource also has a value price-to-book ratio of 1.7. A P/B ratio under 3.0 usually indicates "value."

Even more impressive, the company has a really low price-to-sales ratio of only 0.4. A P/S ratio under 1.0 can mean a company is undervalued.

ScanSource is scheduled to report second quarter earnings on Jan 26. Will North America continue to pick up the slack for a slowing Europe? Stay tuned.

This Week's Value Zacks Rank Buy Stocks

Why is C&J Energy Services Inc. (CJES) so cheap? This Zacks #1 Rank (Strong Buy) has a forward P/E of just 4.3. Yet it's supposed to grow earnings by 36% in 2012 as the drilling sector remains hot. What gives? Read the full article.

The U.S. domestic energy explorers are in the drivers seat. Unit Corporation (UNT) is expected to grow earnings by the double digits again in 2012 after posting double digit growth in 2011. This Zacks #1 Rank (Strong Buy) also has value to go along with the growth as it trades with a forward P/E of just 9.3. Read the full article.

Prestige Brands Holdings, Inc. (PBH) recently made the largest acquisition in its history, buying 17 over-the-counter drug brands from GlaxoSmithKline for $660 million. This Zacks #1 Rank (Strong Buy) has a forward P/E of just 11.8. Read the full article.

It's a great time to be in the oil drilling services business. Weatherford International Inc. (WFT) reported record revenue in the third quarter as earnings jumped 136%. Yet this Zacks #1 Rank (Strong Buy) has cheap valuations, with a P/B ratio of just 1.2. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Thu, 19 Jan 2012 00:00:01 EST Weatherford International Inc. (WFT) reported record revenue in the third quarter as earnings jumped 136%. Yet this Zacks #1 Rank (Strong Buy) has cheap valuations, with a P/B ratio of just 1.2.

Weatherford is one of the largest oilfield services companies in the world. Headquartered in Geneva, Switzerland, it provides life cycle services to the energy industry which encompasses well drilling, evaluation, completion, production and intervention in more than 100 countries.

A Record Third Quarter

On Oct 25, Weatherford reported its third quarter results and met the Zacks Consensus of 26 cents. This was a 136% increase from the third quarter of 2010 which saw EPS of 11 cents.

Revenue rose 33% to a record $3.4 billion from the prior year's quarter but was also up 11% from the second quarter of 2011. North American revenue climbed 48% year over year while International revenue increased 22% from the third quarter of 2010.

In the International segment, Latin America was the strongest contributor of revenue and profit growth.

Double Digit Earnings Growth Expected in 2011 and 2012

Weatherford is scheduled to report fourth quarter and full year 2011 results on Feb 21.

The company gave EPS guidance for the fourth quarter of between 30 and 34 cents. Analysts are betting on the higher end, as the Zacks Consensus Estimate stands at 33 cents.

Over the last 90 days, the 2011 Zacks Consensus has fallen a penny to 87 cents. This is still earnings growth of 55% as the company made just 56 cents in 2010.

For 2012, Weatherford said it "maintains a positive but more measured outlook for its North American business" but still sees moderate revenue growth due to strong activity in Canada and the U.S. oil market.

Internationally, there will still be growth in Latin America. The Eastern Hemisphere, which includes Europe and Russia, is also expected to see improvement.

For those reasons, the analysts see sharply higher EPS in 2012. Over the last 30 days, 3 estimates have moved higher, pushing the Zacks Consensus Estimate up to $1.55.

That is further earnings growth of 79%.

Shares Have Sold Off

Despite the red hot drilling market, investors have been selling the shares since 2011.

This has created a buying opportunity for value investors to get in at cheap levels.

In addition to a P/B ratio of just 1.2, which is well under the 3.0 level which usually indicates value, it also has a forward P/E of just 9.9, well under the 12.4 average of the S&P 500.

Furthermore, the company has a price-to-sales ratio of just 0.9 which is right on the cusp of the level people use, which is 1.0, as a cut-off for an undervalued company.

Big earnings growth is expected of Weatherford in 2012 as drilling remains hot. But this company also has solid valuations and is worth a look from value investors hunting for an oil services play.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Wed, 18 Jan 2012 00:00:01 EST Prestige Brands Holdings, Inc. (PBH) recently made the largest acquisition in its history, buying 17 over-the-counter drug brands from GlaxoSmithKline for $660 million. This Zacks #1 Rank (Strong Buy) has a forward P/E of just 11.8.

Prestige Brands distributes over-the-counter healthcare, personal care and household products worldwide.

Many of the brands are well known and have been around for 70 years or more such as Spic and Span, Comet, Compound W wart treatment, Chloraseptic sore throat products, and Cutex nail polish remover.

Acquisition of GSK Brands

On Dec 20, the company announced it was acquiring 17 over-the-counter pharmaceutical brands from GSK for $660 million in cash. The deal is expected to close in the first half of 2012 and be accretive to earnings in fiscal 2013 which begins on Apr 1, 2012.

Some of the brands include the pain relievers BC, Goody's and Ecotrin, the gastrointestinal (GI) aids Tagamet and Fiber Choice and sleep aid Sominex. The company will have two new platforms with adult aspirin-based analgesics and GIs.

Prestige Brands had already been on an acquisition spree in 2011. It had bought 5 brands from Blacksmith Brands and the Dramamine brand from Johnson and Johnson.

Fiscal 2013 Zacks Consensus Estimate Rises

Analysts have been bullish about the GSK acquisition. But that won't be accretive until the next fiscal year.

That's where you can see the analyst optimism. The fiscal 2013 Zacks Consensus Estimate has moved higher since the announcement. 3 estimates have been revised up pushing the Zacks Consensus to $1.08 from $1.01.

That is earnings growth of 13.2% as the company is expected to make 95 cents per share in fiscal 2012.

The fiscal 2012 Zacks Consensus has been holding steady at 95 cents the last 3 months.

Prestige Brands is scheduled to report fiscal third quarter results on Feb 8.

Lots of Value

Shares sold off, like just about every stock, during the summer of 2011. It has since bounced on news of the acquisition.

Prestige Brands has attractive valuations here. In addition to a forward P/E under the 12.4 average for the S&P 500, it also has a price-to-book ratio of just 1.4. A P/B ratio under 3.0 usually indicates value.

Additionally, the company has a solid 1-year return on equity (ROE) of 11.8%.

Prestige Brands is a value stock with a growth component thanks to strategic additions of key consumer brands.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]> Tue, 17 Jan 2012 00:00:01 EST Unit Corporation (UNT) is expected to grow earnings by the double digits again in 2012 after posting double digit growth in 2011. This Zacks #1 Rank (Strong Buy) also has value to go along with the growth as it trades with a forward P/E of just 9.3.

Unit explores for oil and natural gas and conducts contract drilling of onshore and natural gas wells primarily in the Mid-Continent region, including the Anadarko, Arkoma, Permian, Rocky Mountains and Gulf Coast Basins.

Unit is a mid-cap explorer with a market cap of $2.1 billion.

Unit Beat By 7% in the Third Quarter

On Nov 2, Unit reported its third quarter results and surprised on the Zacks Consensus for the third time in the last four quarters. Earnings per share were $1.11 compared to the consensus of juts $1.04. That easily beat the 2010 results, which was just 73 cents per share.

Revenue jumped 48% to $328.8 million (with 39% contract drilling, 42% oil and natural gas and 19% mid-stream) from $218.1 million in the third quarter of 2010 (which was 39% contract drilling, 44% oil and natural gas and 17% mid-stream).

The average number of drilling rigs rose 21% to 78.9 from the year ago period. Average per day drilling rates also jumped 22% to $19.309 from last year.

In the oil and natural gas segment, the company completed 40 gross wells in the quarter. 38% of the production was oil and natural gas liquids, up from just 30% in the year ago quarter.

Oil production climbed 64% to 620,000 barrels from 379,000 barrels in the third quarter of 2010. Unit's average oil price, including the hedging effects, was $86.19 per barrel, up from $66.94 a year ago.

Unit felt the pain of falling natural gas prices, however, even with its hedges in place. Even though 2011 natural gas production rose 11%, the average natural gas price, including the hedging effects, fell 21% to $4.39 per thousand cubic feet from $5.55 in the year ago quarter.

The Mid-stream segment was also solid as liquids sold per day volumes rose 73%, processing volumes per day gained 54% and gathering volumes per day increased 25%. A new 16-mile pipeline in West Virginia was also scheduled to be completed and operational by the fourth quarter of 2011.

Double Digit Earnings Growth

Analysts are still bullish on both 2011 and 2012. The 2011 Zacks Consensus Estimates has risen a penny in the last 60 days to $4.03.

That is earnings growth of 30.3%.

The 2012 Zacks Consensus Estimate has actually fallen to $4.67 from $4.83 in the last 90 days, but the estimate hasn't changed in the prior month.

Nevertheless, that is still 2012 earnings growth of 16%.

Unit is scheduled to report fourth quarter results on Feb 21, so investors should get better guidance on the outlook for 2012 then.

Still a Value Stock

Shares fell sharply in the summer of 2011 stock market sell-off but then tried to recover. Still, shares have not regained their 3-year high.

That makes Unit an attractive value stock. Its P/E of 9.3 is well below that of the S&P 500 average of 12.4.

It also has a price-to-book of just 1.1. A P/B ratio under 3.0 usually indicates value.

The company also has other solid fundamentals including a 1-year return on equity (ROE) of 10.5%.

Unit is an attractively priced domestic mid-cap explorer. Value investors get an added bonus of double digit earnings growth.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

 
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Zacks Investment Research ]]>