Diamond Offshore Drilling The offshore oil and gas drilling company reported earlier this month fourth-quarter earnings of $188 million, or $1.36 a share, down from year-ago earnings of $242 million, or $1.74. "The company's recent announcement of an upgrade to one of its stacked midwater floaters (with the possibility for a second upgrade) should add to earnings power, but the need for a broader fleet recapitalization remains," Deutsche Bank analysts wrote in a Feb. 10 report. "The significant capital requirement associated with this process and the resultant uncertainty over the sustainability of the special dividend policy leads us to a HOLD rating." Shares of Diamond Offshore Drilling were upgraded to a buy from a hold by TheStreet Ratings. Diamond Offshore Drilling has a forward P/E of 12.82; the average for oil equipment and services companies is 13.82. For comparison, Helmerich & Payne ( HP) has a lower forward P/E of 11.16; Cameron International ( CAM) has a forward P/E of 12.85. Nineteen of the 36 analysts who cover Diamond Offshore Drilling rated it a hold. Eight analysts gave it a buy rating and nine considered it a sell. TheStreet Ratings gives Diamond Offshore Drilling a B- grade and a $73.91 price target. The stock closed Friday at $64.78 and has risen 17.23% year to date.
Huntsman The chemicals company reported last week fourth-quarter earnings of $68 million, or 28 cents a share, up from year-ago earnings of $60 million, or 25 cents. "We are lowering 2012E EPS $0.25 to $1.55 and 2013E $0.15 to $1.75 to reflect a deterioration in the outlook for Pigments as pricing power appears likely to continue to lag raw material pressure, but by a wider margin than we had expected," Jefferies analysts wrote in a Feb. 17 report. "Polyurethanes should improve YoY, but the year hinges on price increases catching up with raw materials in 1H12. Advanced Materials should benefit from demand stabilization and a $20m (savings) restructuring program. Performance Products should see near-term pressure in specialty amines from capacity expansions." Shares of Huntsman were upgraded to buy from hold by TheStreet Ratings. "The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, attractive valuation levels and good cash flow from operations," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company shows low profit margins." Huntsman has a forward P/E of 6.47; the average for commercial chemicals companies is 12.3. For comparison, DuPont ( DD) and Dow Chemical ( DOW) both have higher forward P/Es of 10.71 and 10.24, respectively. Of the 11 analysts who cover Huntsman, six rated it a hold and five gave it a buy rating. TheStreet Ratings gives Huntsman a B- grade with a $16.16 price target. The stock closed Friday at $13.79 and has risen 37.9% year to date.
Montepelier Re Holdings The insurance and reinsurance company reported earlier this month fourth-quarter earnings of $28.5 million, or 40 cents a share, down from year-ago earnings of $41.8 million, or 63 cents. "The company has taken steps in recent months (sale of MUSIC, Torus deal) to free up capital and position itself to be able to write more property business," Sterne Agee analysts wrote in a Feb. 10 report. "However, while pricing has increased in property catastrophe lines, management has held back on deploying capacity to position for potentially better rate going forward. The company in our view continues to have flexibility for further repurchase going forward with year-end equity of $1.55 billion about $50 mm higher than the company's stated goal of maintaining at least $1.5 billion of capital." Shares of Montepelier Re Holdings was upgraded to buy from hold by TheStreet Ratings. "The company's strengths can be seen in multiple areas, such as its revenue growth and largely solid financial position with reasonable debt levels by most measures," TheStreet Ratings wrote. "We feel these strengths outweigh the fact that the company has had sub par growth in net income." Montepelier Re Holdings has a forward P/E of 8.39; the average for reinsurance companies is 8.41. For comparison, Everest Re Group ( RE) has a lower forward P/E of 7.25; Alterra Capital Holdings' ( ALTE) forward P/E is 9.94. All five of the analysts who cover Montepelier Re Holdings rated it a hold. TheStreet Ratings gives Montepelier Re Holdings a B grade and $21.18 price target. The stock closed Friday at $18.45 and has risen 3.94% year to date.