Ensco International (ESV), an offshore drilling company gave its stock help by reporting a strong 13% increase in profits for its fiscal fourth quarter. Lead by higher day rates for its rigs, the company best Wall Street analysts significantly to help inspire stock trading.
Fourth quarter net income of $238.6 million translates into a remarkable $1.66 earnings per share. This was a sharp increase over last year’s fourth quarter earnings of $210.4 million, or $1.39 per share. Analysts had expected $1.55 per share for the company. The 11 cent out performance was credited largely to about a $24,000 per day increase in rig rates.
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One concern for the company was a drop in utilization rates from 96% to 89%. This was slight usage reduction was largely overcome by a much stronger operating profit developed through the higher revenues and day rates. Share of the company’s stock were up 2.68% immediately following the earnings announcement. Traders wanted to get the company in their trading portfolio to pick up on the momentum.
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Investors using a long-term stock trading strategy are likely concerned about the small $.10 dividend the company pays on an annual basis. The one year price target for the stock, according to analysts is $67.10. This suggests there is moderate room for growth given its current spot just above $60. However, some traders may be cautious with the limited dividend yield.
Some long-term traders may be exploring stocks for covered calls, as covered call investing offers a way for long-term investors to make short-term flat or short plays while maintaining the overall long position. Many investors may be looking at these options at the present time as some in the market have a neutral strategy about the outlook for energy stock movement.
The US government has recently reported some increases in oil supplies, and a slow down in energy demands. These macroeconomic stock warning signs have lead to some stock research analyst downgrades for oil and energy stocks. However, several analysts believe Ensco may be a leader in the energy mix with its strong earnings and consistent performance.
Some stock trading tips have recently included suggestions that investors consider a stock trading strategy of waiting for a slight pullback in price before getting in for a medium or longer-term move in the oil and energy stocks. Shares of several leading energy stocks have surged greatly in the last several months in combination with the record highs in oil futures prices.
Ensco currently sits just $7 off its 52-week high at $67.61. Investors were quick to add the stock to their stock market portfolios following the overwhelming earnings announcement. Long-term oil futures may impact how much retention investors have with stocks like Ensco.
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