Oceaneering International Earnings Preview

Oceaneering International (NYSE: OII  ) will try to beat its earnings estimates for the fifth consecutive quarter. The company will unveil its latest earnings on Wednesday, Oct. 26. Oceaneering International is an oilfield provider of engineered services and products mainly to the offshore oil and gas industry, with a focus on deepwater applications.

What analysts say:

• Buy, sell, or hold?: The majority of analysts back Oceaneering International as a buy. But with 64.7% of analysts rating it a buy, Oceaneering International is still below the mean analyst rating of its nearest 10 competitors, which average 75.4% buys. Analysts don't like Oceaneering International as much as competitor McDermott International overall. Sixteen out of 16 analysts rate McDermott International a buy compared to 11 of 17 for Oceaneering International. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
• Revenue Forecasts: On average, analysts predict $565.6 million in revenue this quarter. That would represent a rise of 9.5% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.57 per share. Estimates range from $0.54 to $0.60.

What our community says:
CAPS All-Stars are solidly behind the stock, with 96.8% giving it an "outperform" rating. The community at large agrees with the All-Stars, with 98.1% awarding it a rating of "outperform." Fools have embraced Oceaneering International and haven't been shy with their opinions lately, logging 181 posts in the past 30 days. Even with a robust four out of five stars, Oceaneering International's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Oceaneering International's profit has risen year over year by an average of 8.5% over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 3.5 percentage points in the last quarter. Revenue rose 17.6% while cost of sales rose 23.2% to $419.7 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

Quarter	Q2	Q1	Q4	Q3
Gross Margin	23.1%	21.0%	23.4%	24.3%
Operating Margin	15.0%	13.0%	14.7%	17.1%
Net Margin	10.4%	8.9%	9.5%	11.5%

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