The Netherlands-based company is a provider of proprietary and patented reservoir description, production enhancement and management services to the oil and gas industry.
"It enjoys the best margins, returns on capital and free cash flow conversion among its peers. It has among the best management teams, capital discipline and shareholder-friendly track records," the firm said in an analyst note.
However, Core Laboratories' current valuation is too rich for the firm to recommend the stock. Due to headwinds from low oil prices, Oppenheimer believes the risk/reward is not favorable.
Separately, the company announced yesterday a cash dividend of 55 cents per share of common stock payable in the first quarter of 2016.
Shares of Core Laboratories closed up by 2.88% to $96.42 on heavy trading volume on Tuesday. About 1.33 million of the company's shares were traded today, compared to its average volume of 595,397 shares per day.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate CORE LABORATORIES NV as a Hold with a ratings score of C. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including weak operating cash flow, deteriorating net income and a generally disappointing performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 31.1%. Since the same quarter one year prior, revenues fell by 28.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CORE LABORATORIES NV's earnings per share declined by 48.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, CORE LABORATORIES NV increased its bottom line by earning $5.78 versus $5.28 in the prior year. For the next year, the market is expecting a contraction of 45.1% in earnings ($3.17 versus $5.78).
- The change in net income from the same quarter one year ago has exceeded that of the Energy Equipment & Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 49.8% when compared to the same quarter one year ago, falling from $66.50 million to $33.40 million.
- The gross profit margin for CORE LABORATORIES NV is currently lower than what is desirable, coming in at 34.58%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 16.93% is above that of the industry average.
- Net operating cash flow has decreased to $43.48 million or 41.58% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: CLB