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Value

The energy stocks are out of favor but that means there are opportunities for value investors. Pioneer Drilling Company, Inc. (PDC) is expected to grow earnings by the triple digits in 2012. Yet this Zacks #2 Rank (Buy) has seen its shares sell off for most of 2012. It is now trading with a forward P/E of only 8.9.

Pioneer Drilling provides contract land drilling services to oil and gas companies in Texas, Louisiana, the Mid-Continent, Rocky Mountain and Appalachian regions. It is not limited to domestic customers, however, as it also provides services internationally in Colombia through its Pioneer Drilling Services Division.

The company also provides well, wireline, coiled tubing and fishing and rental services to producers in the American Gulf Coast, offshore Gulf of Mexico, Mid-Continent, Rocky Mountain and Appalachian regions.

What Energy Slowdown?

On May 8, Pioneer reported first quarter results and blew by the Zacks Consensus Estimate by 100%. Earnings per share were 24 cents compared to the consensus of just 12 cents.

Revenue soared 51% to $232 million from $153.3 million in the year ago quarter. It also rose 14% from the fourth quarter of 2011. Higher pricing in Drilling Services, fleet additions and higher utilization and pricing in Production Services boosted the quarter.

Revenue in the Drilling Services Division rose 25% to $124.3 million from a year ago. The utilization rate for the 64 drilling rigs averaged 87%, up 65% from the year before when the fleet had 71 rigs.

Production Services Division saw revenue surge 101% to $107.7 million from the first quarter of 2011. Utilization rates were about 92% compared with 82% a year earlier. Prices also increased to $581 from $509 per hour a year ago.

Outlook For 2012 Still Bullish

Lower natural gas prices have caused some chaos in the drilling industry as E&Ps have scrambled to move rigs and production to new locations. However, Pioneer continued to see good demand for its services in oil and liquids-rich basins.

80% of its assets operate in oil and natural gas liquids-producing areas. It added 6 well service rigs and 5 wireline units in the first quarter and anticipates bringing on additional equipment throughout the year.

In the second quarter, drilling rig utilization is expected to average between 89% and 91%.

2012 Zacks Consensus Estimate Rises

The analysts are very bullish on Pioneer in 2012. 5 estimates have moved higher in the last 30 days, pushing the Zacks Consensus up 13.5% to 84 cents.

This is huge earnings growth of 154% as the company only made 33 cents in all of 2011.

Shares Sink in 2012

Despite rising earnings estimates and strong earnings growth, investors have been selling Pioneer in 2012. Energy and energy services stocks have been out of favor.

But this has made Pioneer a strong value stock.

In addition to a single digit P/E, it also has a price-to-book ratio of just 0.9. That is well below the average of the S&P 500 which is at 2.4.

Pioneer also has a low price-to-sales ratio of just 0.6. A P/S ratio under 1.0 usually indicates value.

For value investors looking for an energy play, without buying an explorer, Pioneer certainly fits the bill.

This Week's Value Zacks Rank Buy Stocks

Whirlpool Corporation (WHR) is feeling the global slowdown even as Latin America appliance sales remain fairly strong. Both Europe and Asia saw declining sales in the first quarter. But this Zacks #1 Rank (Strong Buy) has deep value, with a forward P/E of only 9.1. Read the full article.

Even as it feels the slowdown in Europe, Glatfelter (GLT) is still expected to see double digit earnings growth in 2012. This Zacks #1 Rank (Strong Buy) is also a rare growth stock that also has value. Glatfelter has a forward P/E of just 11.6. Read the full article.

The agriculture and construction equipment makers have been in the sweet spot. CNH Global N.V. (CNH) is expected to grow earnings by the double digits as global farmers reap record income. But you can pick up this Zacks #1 Rank (Strong Buy) on the cheap as it trades with a P/S ratio of only 0.5. Read the full article.

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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