It may be of little surprise, then, that analysts are quick to downgrade Ensco on any sign of near-term weakness. They got just such an opportunity on Thursday, when the firm announced that it expects sequential revenue to come in flat this quarter, rather than the 3% lift previously forecast.
It now looks like Ensco will be making slightly less (oodles of) cash for the balance of 2007, because of continuing weak rates in the Gulf and some mobilization delays internationally. If anything, investors should be concentrating more on the latter point.
While it's possible to blame work delays on exogenous factors, they will still influence customer perceptions of reliability. For that reason, I didn't take it lightly when Rowan
I'm quite positive on Ensco for a host of reasons. I like its terrific margins, its lovely balance sheet, and its geographic and customer diversity. The only thing that bothers me is this issue of customer perception. It's a key factor whether dayrates weaken further or manage to rebound. Present customers like BP
Drill down into related Foolishness:
- Rowan is both a driller and a drillmaker, for now.
- Pride International has stoked hopes of further M&A in the driller space.
- Here's one energy play that may sidestep the volatility of the drillers.
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