Ensco PLC Class A 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 PLC Class A (NYSE: ESV) has been reiterated by TheStreet Ratings as a buy with a ratings score of A . The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year, growth in earnings per share and expanding profit margins. 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 7.0%. Since the same quarter one year prior, revenues slightly increased by 8.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.41, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.36, which illustrates the ability to avoid short-term cash problems.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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 has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ENSCO PLC increased its bottom line by earning $5.23 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($6.84 versus $5.23).
  • The gross profit margin for ENSCO PLC is rather high; currently it is at 51.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 20.22% is above that of the industry average.

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide. Ensco PLC Class A has a market cap of $13.58 billion and is part of the basic materials sector and energy industry. The company has a P/E ratio of 11.2, below the S&P 500 P/E ratio of 17.7. Shares are down 1.6% year to date as of the close of trading on Tuesday.

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

--Written by a member of TheStreet Ratings Staff.

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