Merrill's still has RON a buy; today is a buying opp $18-22 ...
*** New earnings revisions could take out a couple of price levels like RON is about to ''open up'' to. However, ESV, RDC , MRL and others, along with virtually the entire E&P sector all basically have a loss, or virtually no earnings projected; we are to levels of asset replacement values and valuations on cash flow and the earnings ''potential'' with the return to normalized earnings/crude price enviroments... RON blowing off to an open at $21 is definitely BAD NEWS; but lets see how much buying support comes rushing in... I would think RON would close over $22 3/8ths or so, even if it touches sub $21... time will tell... gotta go.
This is a major turning point day - but, it is also the last day of the month where these mutual fund managers are going to dump and window dress their fund holdings - oilpatch stocks are definitely out here; the end of month buying opportunity is here... let's see if we get a big bounce next week - I think we will.
*** here is Merrill's comments:
28 January 1999
Kevin Simpson, CFA First Vice President
Cooper Cameron Corp
Good Value Even With Tough 1999
Long Term BUY Reason for Report: Cutting 1999 Estimate to $1.25
BUY*
. **The views expressed are those of the macro department and do not necessarily coincide with those of the Fundamental analyst. For full investment opinion definitions, see footnotes
.Investment Highlights: · Notwithstanding our weakened earnings outlook for 1999 and uncertainty about 2000 numbers, we remain positive on RON shares. Management is likely to increase earnings power in the downturn, including participation in the consolidation of the compressor business.
Fundamental Highlights: · 4Q98 EPS from operations were $0.66 (down from $0.83 in 4Q 97) were in line with out most recent estimate and consensus. Weakening petroleum equipment margins were offset by lower SG&A expenses. Including a $0.17 charge for cost rationalization, EPS was $0.49.
· The outlook for 1999 weakened as orders for petroleum equipment fell 21% vs. 3Q98 and 60% vs. 4Q97. As a result, we are again cutting our 1999E from $1.60 to $1.25. This estimate assumes that the surface wellhead revenues will fall at least 30%.
· We are estalishing a $1.25 estimate for 2000, for which our visibility is admittedly poor. The slowing order rate for subsea equipment and drilling equipment (BOPs) is likely to soften the impact of the mild upstream spending recovery we expect in 2000 (assuming a recovery in oil prices to the high teens (WTI) by 2H99.)Bulletin United States Oil Services
Price: $25 1/16
Estimates (Dec) 1998A 1998E 2000E
EPS: $2.76 $1.25 $1.25 P/E: 9.1x 20.1x 20.1x EPS Change (YoY): -54.5% 0.0% Consensus EPS: $1.73 $1.94 (First Call: 22-Jan-1999) Q4 EPS (Dec): $0.66A
Cash Flow/Share: $4.07 $2.75 $2.80 Price/Cash Flow: 6.2x 9.1x 9.0x
Dividend Rate: Nil Nil Nil Dividend Yield: Nil Nil Nil
Opinion & Financial Data
Investment Opinion: C-1-1-9 Mkt. Value / Shares Outstanding (mn): $1,328.3 / 53 Book Value/Share (Dec-1998): $14.66 Price/Book Ratio: 1.7x LT Liability % of Capital: 34.7%
Est. 5 Year EPS Growth: 15.0%
Stock Data
52-Week Range: $71-$20 1/8 Symbol / Exchange: RON / NYSE Options: Phila Institutional Ownership-Spectrum: 70.5% Brokers Covering (First Call): 17
ML Industry Weightings & Ratings**
Strategy; Weighting Rel. to Mkt.: Income: Underweight (07-Mar-1995) Growth: Overweight (07-Mar-1995) Income & Growth: Overweight (07-Mar-1995) Capital Appreciation: Overweight (26-Apr-1994)
Market Analysis; Technical Rating: Average (28-Dec-1998)
*Intermediate term opinion last changed on 23-Mar-1998 |
