Cheap Offshore Drilling Play Ensco Crushes Earnings Estimates, Heading Higher

| About: Ensco PLC (ESV)

Ensco (NYSE:ESV), a large offshore driller that I hold both as a growth and income play, reported earnings today. The company crushed earnings estimates, is showing good day rate increases, and is heading higher.

Key highlights from Ensco's earnings report:

  • Earnings rose 68% Y/Y after items to come in at $1.53 a share, easily beating estimates for only $1.30 a share.
  • The company credited the startup of two new deepwater rigs this year, along with better day rates for all its deepwater rigs for the higher earnings.
  • Ensco recorded revenues of $1.124 billion in the quarter. These increases were driven by a $22,000 increase in the average day rate and a seven percentage point increase in fleet-wide utilization.
  • The company is also on track to complete and deploy six new deepwater weeks by 2014 which should continue to provide significant revenue growth.

Ensco Plc is the owner of the world's second-largest offshore drilling fleet.

4 additional reasons ESV is still a good growth and value play at $59 a share:

  1. The company pays a solid 2.6% dividend, and payouts have risen dramatically over the last several years.
  2. Ensco has met or beaten earnings estimates for sixth straight quarters and the stock sells at a cheap 8.3x forward earnings.
  3. Analysts project revenues to grow at a better than an 18% clip in FY2013, and stock sells for a five year projected PEG of under 1 (.69).
  4. As the company brings new rigs online, earnings will increase exponentially. Ensco made just $3.07 a share in FY2011 but is on track for better than $5.25 a share this fiscal year. Consensus earnings stands at $7.09 a share in FY2013 (but look for that to be revised upward, based on this quarter, in the coming weeks).

Disclosure: I am long ESV. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.