Strong Buy on Newpark Resources - Analyst Blog


On May 25, Zacks Investment Research upgraded Newpark Resources Inc. ( NR ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Newpark Resources Inc. has been witnessing rising earnings estimates on the back of strong first quarter 2013 results. Moreover, this product and service provider in the oil and gas exploration industry delivered positive earnings surprises in 7 of the last 10 quarters with an average beat of 10.9%.

Newpark Resources' first quarter earnings per share came in at 18 cents, surpassing the Zacks Consensus Estimate by 5.9%. The results benefited from strong domestic and international performance at the Fluids Systems and Engineering segments. The Environmental Service segment also delivered, thanks to the strengthening initiatives in the Gulf of Mexico. However, soft results from Mats and Integrated Services segments marginally offset the positives.

The strong financial position of Newpark Resources enables its board of directors to authorize share buybacks thereby boosting shareholder value. In the first quarter the board authorized another $50 million share repurchase program, following the $50 million repurchase program completed in the fourth quarter of 2012.

The board of directors of Newpark Resources has decided to initiate a process to hive its Environmental Services segment to remain competitive and focus on developing technologies in its core drilling fluids and mats segments. In addition, the company also continues to focus on expanding its area of operations.

The Zacks Consensus Estimate for 2013 increased 6.6% to 81 cents per share as 5 out of 8 estimates were revised higher over the last 30 days. For 2014, the majority of estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 11.4% to 98 cents per share.

Other Stocks to Consider

Besides Newpark Resources Inc. other operators in the industry with a favorable Zacks Rank  are Exterran Holdings Inc. ( EXH ), Dawson Geophysical Company ( DWSN ) and Exterran Partners L.P. ( EXLP ). All these stocks presently carry a Zacks Rank #1 (Strong Buy) and look well positioned now.

DAWSON GEOPHYS (DWSN): Free Stock Analysis Report

EXTERRAN HLDGS (EXH): Free Stock Analysis Report

EXTERRAN PTNRS (EXLP): Free Stock Analysis Report

NEWPARK RESOUR (NR): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: DWSN , EXH , EXLP , NR

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