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Value

The energy stocks just keep getting cheaper. Parker Drilling Company (PKD - Snapshot Report) has seen its shares plunge in 2012 on fears about falling natural gas prices. But that means this Zacks #1 Rank (Strong Buy) is cheaper than ever, with a forward P/E of just 6.2.

Parker Drilling provides contract drilling solutions, rental tools and project management to the energy industry.

It has 24 land rigs and 2 offshore barge rigs in its international fleet. Its U.S. fleet consists of 13 barge rigs in the Gulf of Mexico, 1 land rig located in the U.S. and 2 land rigs in Alaska undergoing commissioning.

The company's rental tool segment supplies equipment to operators on land and offshore in the U.S. and some international markets.

Parker Beat Again In Q1

On May 2, Parker reported its first quarter results and surprised on the Zacks Consensus by 29.4%. Earnings per share were 22 cents compared to the consensus of just 17 cents. That is well above the 4 cents it made a year ago. It was also the fourth earnings surprise in a row.

Revenue rose 13% to $176.6 million from $156.2 million a year ago.

Despite the chaos in the industry as natural gas prices fell and explorers moved into the liquids arena, Parker was able to position itself to capitalize.

The Rental Tools segment grew revenue 27% to $66.3 million from $52.3 million as demand for premium drill pipe and related products for U.S. drilling continued to expand.

The U.S. Barge Drilling segment also boosted the quarter as revenue rose 75% to $27.8 million from $15.9 million as drilling demand in the coastal waters of the Gulf of Mexico remained strong.

Bullish On 2012

In May, the company was still bullish on the outlook for the rest of the year.

"Our current business activity and the expected trends in our markets should support continued strength in our business," said Robert Parker Jr., President and CEO.

"Oil-directed and gas liquids-directed drilling continues to expand in the U.S., both on land and in the coastal waters of the U.S. Gulf of Mexico. In addition, the U.S. land drilling market continues to grow footage drilled, a prime indicator of demand for drill pipe and other rental tools," he added.

Analysts Still Like The Story

1 estimate has been revised higher for 2012 in the last 30 days which has pushed the Zacks Consensus up to 79 cents from 78 cents.

This is earnings growth of 46% as the company made just 54 cents in 2011.

Dirt Cheap Stock

Shares have been cheap for awhile but the sell off in 2012 has made them dirt cheap.

In addition to an incredibly low P/E of just 6.2, it also has a price-to-book ratio of 1.0 which is well below the 3.0 cut-off I use for value.

Parker also has a price-to-sales ratio of only 0.8. A P/S ratio under 1.0 can indicate that a company is undervalued.

Investors are running scared from the energy sector. But for value investors, Parker Drilling provides an opportunity to get in at a very attractive level.

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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