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CARBO is little known outside of those in the energy industry. But the company is the world's largest supplier of ceramic proppant for fracturing oil and gas wells.
It also provides fracture design and consulting services as well as fracture simulation software. The company has a market cap of $3.8 billion.
Double Digit Revenue Growth in Q1
On Apr 28, CARBO reported its first quarter results and beat the Zacks Consensus Estimate for the 5th quarter in a row. Earnings per share were $1.30 compared to the consensus of $1.02 for a 27.5% beat.
Revenue jumped 22% to $150.8 million. North American sales volume was hot, rising 11% compared to the year ago quarter. This canceled out the 8% decrease in the international proppant sales volumes.
The growth is being propelled by all the drilling in the unconventional plays in North America, specifically in the Bakken, Haynesville, Permian, Colony Wash and Eagle Ford basins.
More Demand Than Supply
It's a rough problem to have when customers want your product but you don't have enough of it. CARBO has been expanding its Toomsboro Line 4 and New Iberia Line 2 and expects expansion on those lines to be completed by the end of the year.
That will increase its total annual proppant manufacturing capacity to 2.1 billion pounds.
Outlook Remains Positive
There is no indication that the Exploration and Production industry is slowing down as we head into the second half of the year.
However, the second quarter historically has meant reduced proppant sales volumes due to lower activity in Canada during spring break-up.
CARBO is expected to report second quarter results on July 28.
Big Earnings Growth Expected in 2011
After the big earnings beat in April, analysts revised their full year estimates higher.
But even in the last 30 days, the Zacks Consensus has moved to $5.35 from $5.34 which is earnings growth of 56% compared to 2010. The company only made $3.43 in 2010.
Not Cheap But You're Getting the Growth
CARBO isn't a value stock, that's for sure. It trades with a forward P/E of 31 so you're betting on the growth.
Shareholders, however, are rewarded with a small dividend, currently yielding 0.5%. But let's be real. You're buying it for the growth.
Shares At 10 Year High
If you made a bet on CARBO in the recession, it has paid off handsomely for you as shares have soared to 10-year highs.
With the energy sector still hot, and drilling not slowing down, CARBO is still an attractive aggressive growth stock.
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