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Value

The oil services companies still have mojo. Oil States International, Inc. (OIS - Snapshot Report) had a record first quarter as drilling demand remained hot. Yet skittish investors have sold off shares, making this company a true value stock with a forward P/E of just 8.7.

Oil States has two major divisions: Offshore Products and Well Site Services. Offshore Products manufactures deepwater capital equipment which is used on floating production platforms, subsea pipelines and floating drilling rigs.

Well Site Services provides land drilling with its fit-for-purpose drilling rigs in West Texas and the Rocky Mountain region.

The company rents tools to producers to be used in completion and production of a well. Oil States' rental tool division is focused on the Rockies, Barnett Shale, the Mid Continent and in the Fayetteville Shale oil producing regions and is growing in the popular Marcellus, Haynesville and Bakken shale regions.

Oil States Beat Big Again In Q1

On Apr 26, Oil States reported its first quarter results and blew by the Zacks Consensus Estimate by 23%. It kept intact the company's amazing earnings surprise streak which stretches back nearly 5 years with only one miss.

It has been beating big the last 4 quarters as the average beat was 12.6% during that time.

Earnings were a record $2.20 per share, 48% higher than the $1.13 the company made in the first quarter a year ago.

Sales rose 45% to $1.1 billion from $760.4 million a year ago due to organic growth initiatives, increased deepwater spending and higher U.S. drilling and completion activity. Sales in the Accommodations segment climbed 44% to $301.8 million. The Well Site Services segment also saw double digit sales gains of 30% to $183 million.

A lot of players in the natural gas industry were hit by the downturn in natural gas prices but Oil States was able to weather the shift in drilling activity from the dry gas regions to the liquids basins because it had 55 locations across the U.S. which allowed it to manage the change.

Customer demand for tubulars also remained strong with a 33% year over year increase in shipments due mainly to higher U.S. drilling activity along with increased shipments of OCTG destined for offshore wells.

2012 Zacks Consensus Estimate Keeps Rising

Analysts are still bullish about 2012. In the last 60 days, the full year Zacks Consensus Estimates has risen 8% to $8.01.

That is 36% earnings growth compared to last year where the company only made $5.88.

The expected earnings growth in both 2012 and 2013 is heading in the right direction as you can see on the far right of this chart.

Plenty Of Value

Shares have taken a dive since May, although it's not as severe as the one that happened in the summer of 2011.

But it is enough to make Oil States an even bigger value.

Along with a P/E under 10, Oil States also has a price-to-book ratio of 1.7. A P/B ratio under 3.0 can mean a company has value.

Additionally, Oil States has a price-to-sales ratio of 0.9. That scoots in right below the 1.0 level, which is the level that usually indicates a company is undervalued.

The company also has other solid fundamentals like a 1-year return on equity (ROE) of 19.8%. The S&P 500, in comparison, has an average ROE of just 13.1%.

It's not too late to get in on the domestic drilling boom. Oil States is an attractive value stock with the added bonus of strong growth.

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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