ESV: I still like it for a buy. Although I seem to be wrong: I liked it and bought it at an average cost of $54-55.
Barron's says today:
For some stocks, the big dips might not make them worth buying. Jefferies’ analyst Brad Handler and team explain why they downgraded Ensco today:Even after taking delivery of its floating rig newbuilds, Ensco will still be generating more than 1/3 of its revenues and EBITDA from jackups in 2016. What’s more, we estimate that slightly less than half of its jackup revenues will still be derived from standard rigs, which…will make up the units that are more at risk of obsolescence…Further, we note that after our revisions, Ensco screens expensive on a relative valuation basis. Specifically, despite our 2016 EBITDA estimate remaining 4% above Street expectations, Ensco is still trading at an 11% premium relative to peers despite its above average nearer-term floater risk and in light of the jackup risk. We acknowledge that free cash flow remains robust, even in our revised outlook, but note risk to this, especially as it relates to the need for additional capex just to sustain our current outlook.
Company's been profitable each year past ten. 6% dividend yield while holding (assuming it doesn't get cut). Company trades a 1x stated bv (assuming risk of obsolescence won't cause assets to be written off). |
