Jeff Williams'  Instablog

Many changes are currently impacting the Oil and Gas equipment service industry. The introduction of new fracking techniques, Horizontal Drilling, increased safety regulations and rising domestic construction demands have given the industry a catapult. Schlumberger NV (SLB) is a leader in this industry and is situated well to profit from advances.

Due to the listed advances in the Oil and Gas equipment industry analysts at Bloomberg Businessweek are expected Schlumberger NV to report substantial gains over the next few years. Analysis at Bloomberg Businessweek are expecting revenues for FY 2013 at $46.1 billion. This represents a 9.50% increase over 2012. Analysts are also estimating earnings per share for FY 2013 to be at $4.74 which is also a significant increase over 2012.

As analysts are currently estimating Schlumberger NV to report an EPS FY 2013 at $4.74 and revenues to be a $46.1 billion this looks to be an excellent opportunity to add a position.

1. Estimated Sales = $46.1 billion

2. Estimated Profit Margin = 13.66%

3. Earnings = $6.30 billion

4. Shares Outstanding = 1.33 billion

5. Estimated EPS = $4.74

6. 5 year average P/E = 19.8

To read more: Schlumberger NV: Poised for $90.00 plus in 2013

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Over the past couple of years, the Oil and Gas equipment service industry has been evolving rapidly. With the introduction of new fracking techniques, increased safety regulations and domestic construction demands showing no signs of slowing down, these factors have given the industry a boost. One of the companies looking to capitalize on this growth is Flotek Industries (FTK).

In the article below, I will look at the Flotek Industries past profitability, debt and capital, and operating efficiency. Based on this information, we will get to see the company's sales, returns, margins, liabilities, assets, returns and turnovers. We will get an understanding of how the company has grown over the past few years, thus keeping up with industry trends and what to expect in the future.

All numbers sourced from Company Webpage and Morningstar.

Profitability

Profitability is a class of financial metrics used to assess a business's ability to generate earnings compared with expenses and other relevant costs incurred during a specific period of time. In this section, we will look at four tests of profitability. They are: net Income, operating cash flow, return on assets, and quality of earnings. From these four metrics, we will establish if the company is making money, and gauge the quality of the reported profits.

• Net Income 2010 = $(43) million.
• Net Income 2011 = $31 million.
• Net Income 2012 TTM = $28 million.

Over the past three years Flotek's net profits have increased from $(43) million in 2010 to $28 million in 2012 TTM. This signifies a $71 million dollar increase in earnings over the past 3 years.

• Operating Cash Flow 2010 = $(6) million.
• Operating Cash Flow 2011 = $49 million.
• Operating Cash Flow 2012 TTM = $63 million.

Operating cash flow is the cash generated from the operations of a company, generally defined as revenue less all operating expenses, but calculated through a series of adjustments to net income.

Over the past three years, the company's operating cash flow has also increased. Flotek's operating cash has increased by $69 million.

To read more: Flotek Industries: Small Cap With Strong Balance Sheet In Good Sector

Last week I wrote an article stating that of the big three oil service company's Halliburton (HAL) has the most potential for growth moving forward. In the article Oilfield Service Comparason: Why Halliburton has the most upside, I looked at many factors for comparison. The factors I analyzed were profitability, debt, working capital, return on capital employed, total return to the investor and finally a PEG ratio to get a current valuation.

In the article below, I create stock price target for Halliburton using revenue and EPS estimates provided by MSN Money.

Currently Analysts estimate Halliburton to have an EPS in 2013 at 3.03 and $3.96 for 2014.

1. Estimated Sales = $26.838 billion

2. Estimated Profit Margin = 10.50%

3. Earnings = $2.818 billion

4. Shares Outstanding = 930 million

5. Estimated EPS = $3.03

6. Forward P/E = 14.7

To read more: Halliburton Stock Price Target 2013

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.