Activist Barry Rosenstein Takes 9% Stake In Oil States International, Inc. (OIS)

Other oil and gas equipment and services companies include Superior Energy Services (NYSE:SPN), Weatherford International Ltd (NYSE:WFT), Baker Hughes Incorporated (NYSE:BHI), and National-Oilwell Varco, Inc. (NYSE:NOV). Superior Energy Services (NYSE:SPN) and National Oilwell Varco are in a similar situation to Oil States International, Inc. (NYSE:OIS) in terms of their valuations: each carries a trailing P/E of 12, with the sell-side bullish on each of these companies as well and as a result their five-year PEG ratios are below 1 as well. Revenue growth was quite strong at each in their most recent quarter compared to the same period in the previous year, although National-Oilwell Varco, Inc. (NYSE:NOV)’s earnings were down by 17%. Baker Hughes Incorporated (NYSE:BHI) trades at a fairly small premium to these companies, and with that business also struggling recently we think that we would avoid it for now. That leaves Weatherford International Ltd (NYSE:WFT), whose adjusted earnings numbers have failed to meet expectations each of the last three quarters and earned almost no profits in Q4 2012. The sell-side expects the company to improve, and it trades at 9 times forward earnings estimates.

Still, we’re not particularly excited about Weatherford International Ltd (NYSE:WFT) given its recent performance, and certainly think it’s probably best to wait before considering a purchase. Out of the peers we’ve mentioned, Superior looks somewhat interesting from a value perspective as the stock is moderately cheap and the company appears to be doing all right. As for Oil States International, Inc. (NYSE:OIS), we can see some potential sources of upside from JANA’s activism but would probably want more details as to management’s reaction before relying on the breakup as the core of an investment thesis.

Disclosure: I own no shares of any stocks mentioned in this article.

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