Smith Int'l Raises Guidance - Analyst Blog
Smith International (SII) reported inline third-quarter 2008 results. Net income rose 27% year-over-year to $211.9 million, driven by seasonal drilling recovery in Canada, higher U.S. distribution sales volumes and contributions from its W-H Energy acquisition, while revenue increased 27% to $2.85 billion.
The company also raised its fourth-quarter 2008 earnings outlook, aided by demand acceleration, price increases, cost discipline, and successful acquisition integration. The recent sell-off has made valuation even more compelling for this quality oilfield service name.
We expect steady revenue growth and margin expansion going forward. Our new $55 price objective, reduced from $78 before, reflects 2009 P/E and EV/EBITDA multiples of 12.5x and 6.0X, well within historical trading ranges.
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