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Earnings season is off to a rocky start with S&P companies like IBM Corporation (NYSE:IBM), Stanley Black & Decker (NYSE:SWK) and USG Corporation (NYSE:USG) all delivering deeply disappointing results. One sector I look to deliver solid results this quarter is Energy. Domestic energy production is booming and there is lots of activity deep offshore in a variety of new energy plays (Brazil, Mozambique, etc.).

One oil services firm that just delivered stellar quarterly results and appears poised to move much higher is Noble Corporation (NYSE:NE). This is the third straight quarter the company has delivered earnings that has easily beat consensus estimates. It also just announced a development that should have a positive effect on the stock.

Noble Corporation is as an offshore drilling contractor for the oil and gas industry. The company offers contract drilling services for oil and gas wells.

Quarterly Results: Noble posted earnings of 85 cents a share, 15 cents above the consensus estimate. Revenues also beat expectations. Results were buoyed by "downtime" that fell to 4.6% in the quarter from 5.2% previously.

Spin Off: The company announced in late September that it plans to split the company in two. The company will spin off a business comprised of many of its standard specification drilling units. Noble would continue to own and operate its high-specification assets, focusing on deepwater and ultra-deepwater markets for drillships and semisubmersibles and harsh environment and high-specification markets for jackups. This should result in a higher multiple for the remaining company and should be viewed as a positive catalyst.

5 additional reasons NE is undervalued at less than $38 a share:

  1. Revenues are tracking to a ~20% gain this fiscal year and analysts believe the overall enterprise will deliver a ~25% sales increase in FY2014. The stock sports a five year projected PEG of less than 1 (.58).
  2. Earnings are also rising at an impressive rate. After posting ~$2 a share in earnings in FY2012, the company is looking to deliver almost $3 a share in earnings in FY2013. Consensus estimates currently call for the overall company to post almost $4.50 a share in earnings in FY2014.
  3. Given this growth in earnings & revenues, the stock is cheap at less than 8.5x forward earnings.
  4. Insiders have a significant stake in the firm and have not sold any shares in the last six months. NE also pays a solid 2.7% and this should increase as newbuilds come on line and earnings rise significantly.
  5. The 33 analysts that cover the company have a $47 a share median price target on NE, ~25% above its current stock price.
Source: Noble: Driller Delivers Stellar Results And Is Going Higher