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It's a great time to be in the oil drilling services business. Weatherford International Inc. (WFT - Analyst Report) reported record revenue in the third quarter as earnings jumped 136%. Yet this Zacks #1 Rank (Strong Buy) has cheap valuations, with a P/B ratio of just 1.2.

Weatherford is one of the largest oilfield services companies in the world. Headquartered in Geneva, Switzerland, it provides life cycle services to the energy industry which encompasses well drilling, evaluation, completion, production and intervention in more than 100 countries.

A Record Third Quarter

On Oct 25, Weatherford reported its third quarter results and met the Zacks Consensus of 26 cents. This was a 136% increase from the third quarter of 2010 which saw EPS of 11 cents.

Revenue rose 33% to a record $3.4 billion from the prior year's quarter but was also up 11% from the second quarter of 2011. North American revenue climbed 48% year over year while International revenue increased 22% from the third quarter of 2010.

In the International segment, Latin America was the strongest contributor of revenue and profit growth.

Double Digit Earnings Growth Expected in 2011 and 2012

Weatherford is scheduled to report fourth quarter and full year 2011 results on Feb 21.

The company gave EPS guidance for the fourth quarter of between 30 and 34 cents. Analysts are betting on the higher end, as the Zacks Consensus Estimate stands at 33 cents.

Over the last 90 days, the 2011 Zacks Consensus has fallen a penny to 87 cents. This is still earnings growth of 55% as the company made just 56 cents in 2010.

For 2012, Weatherford said it "maintains a positive but more measured outlook for its North American business" but still sees moderate revenue growth due to strong activity in Canada and the U.S. oil market.

Internationally, there will still be growth in Latin America. The Eastern Hemisphere, which includes Europe and Russia, is also expected to see improvement.

For those reasons, the analysts see sharply higher EPS in 2012. Over the last 30 days, 3 estimates have moved higher, pushing the Zacks Consensus Estimate up to $1.55.

That is further earnings growth of 79%.

Shares Have Sold Off

Despite the red hot drilling market, investors have been selling the shares since 2011.

This has created a buying opportunity for value investors to get in at cheap levels.

In addition to a P/B ratio of just 1.2, which is well under the 3.0 level which usually indicates value, it also has a forward P/E of just 9.9, well under the 12.4 average of the S&P 500.

Furthermore, the company has a price-to-sales ratio of just 0.9 which is right on the cusp of the level people use, which is 1.0, as a cut-off for an undervalued company.

Big earnings growth is expected of Weatherford in 2012 as drilling remains hot. But this company also has solid valuations and is worth a look from value investors hunting for an oil services play.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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