Writing that “the valuation remains attractive for this niche player in the oil and gas service sector,” a go-to website for investors is characterizing shares in Lafayette-based Frank’s International a good buy — with some risk. Frank’s (FI) went public Friday. The award-winning site, Seeking Alpha, was founded by former Wall Street analyst David Jackson and partners with such heavyweights as MarketWatch, Nasdaq, Yahoo! Finance, CNBC and MSN Money.

Seeking Alpha says as long as energy prices remain stable, in addition to other extenuating factors, an energy sector buy such as Frank’s will remain a pretty good bet:
The long-term prospects remain good for the company as the world remains hungry for energy. Furthermore, the company holds leading positions in the deep water offshore market. Yet there are some risks. This includes volatile energy prices, tighter regulation, technological changes and potential liability in case of a leak or blow-up of a well.

There are some other key risks as well. This includes a complicated company structure and the fact that the Mosing family remains in tight control, holding 85.1% of the voting power.

Yet overall I am slightly optimistic. Full-year revenue for 2013 could come in between $1.1 and $1.2 billion. Net earnings could advance toward $350 to $400 million, valuing the company around 15 times expected earnings.

I think this is quite an interesting valuation for a specialized niche player in the oil service industry. On top of that is the potential for a buyout, as giant service providers like Schlumberger (SLB) could eye further expansion, and if they manage to convince the Mosing family.
Read the whole analysis here.

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