Ensco PLC Stock Buy Recommendation Reiterated (ESV)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Ensco (NYSE: ESV) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, good cash flow from operations, compelling growth in net income and increase in stock price during the past year. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

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Highlights from the ratings report include:
  • ESV's revenue growth has slightly outpaced the industry average of 14.4%. Since the same quarter one year prior, revenues rose by 22.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for ENSCO PLC is rather high; currently it is at 54.50%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 30.60% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 155.08% to $577.00 million when compared to the same quarter last year. In addition, ENSCO PLC has also vastly surpassed the industry average cash flow growth rate of 19.77%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 68.0% when compared to the same quarter one year prior, rising from $204.50 million to $343.50 million.
  • After a year of stock price fluctuations, the net result is that ESV's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide. Ensco has a market cap of $12.89 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 10.8, below the S&P 500 P/E ratio of 17.7. Shares are up 18.3% year to date as of the close of trading on Wednesday.

You can view the full Ensco Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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