Cameron International Down 10%: Can't Win in Oil Services

I don't own Cameron International (CAM), but it was one I was considering when I decided on Smith International (SII) instead... so they have earnings, fine earnings, but guidance is again "disappointing". As with Smith International and a host of other names in oil services, whatever you buy - you lose money on, the minute they open their mouth during earnings. [US Markets Continue to Savage Oil Service Stocks].

This is why I reduced National Oilwell Varco (NOV) - since it had not opened its mouth yet. There is no winning right now in earnings season - bad news is punished, and good news is not believed and you are punished for future fears. Bear market baby. This is simply multiple contraction across the board.

• Oil services company Cameron International Corp (CAM) reported higher fourth-quarter earnings on Thursday, boosted by strong demand from its oil and gas producer customers, but its shares fell 7 percent on a weaker-than-expected outlook.
• Net income rose to $125.9 million, or 54 cents per share, from $96.5 million, or 42 cents per share, in the year-ago quarter. Excluding items, the company posted earnings of 61 cents a share, a penny above Wall Street's expectations and well above year-ago earnings of 47 cents a share.
• Quarterly revenue rose 25 percent to $1.34 billion, spurred by strong revenue growth from its drilling and production systems business.
• However, the company's first-quarter and full year 2008 outlook fell short of analysts' expectations and shares of the company fell $3.06 in pre-market trade to $40.
• The Houston-based company forecast first-quarter earnings of about 50 cents to 53 cents a share and full year 2008 earnings of $2.45 to $2.55 a share. Analysts, on average, have forecast first-quarter earnings of 59 cents a share and full year 2008 earnings of $2.63 a share, according to Reuters Estimates.

Disclosure: Long Smith International, National Oilwell Varco in fund; no personal position

Comments

[thinking ahead:]

This is a tough call. I went the other way on NOV for two reasons. First, the stock is already way off its highs. Second, NOV is very levered to the deepwater business - the hottest corner ofthe patch. I am a little concerned about the near-term effect of the acquisition, but still think NOV will report and guide big.

2008 Feb 01 10:40 AM

[biomedlives:]

Though RIG went down after a good earnings report, it, DO and NE are appealing for their deepwater activity.

2008 May 11 09:36 AM

[CrossProfit_:]

OMNI has a lawsuit or two left over from previous management and if you strip them away, this micro service company has potential with its new management. The 25% jump yesterday is just the beginning.

Just a thought.

CrossProfit

2008 May 21 03:37 AM

[CrossProfit_:]

Disclosure: long OMNI

2008 May 21 03:38 AM