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Oil drilling equipment maker Cameron International Corp. (CAM - Analyst Report) reported strong fourth quarter results, propped up by robust performance from its ‘Drilling & Production Systems’ segment.

The Houston, TX-based company came out with earnings per share – excluding charges – of $1.00, ahead of the Zacks Consensus Estimate of 96 cents and the year-ago adjusted profit of 95 cents.

Cameron’s quarterly revenue, at $2,937.5 million, was up 21.1% year over year and was above the Zacks Consensus Estimate of $2,757.0 million.

For its fiscal year ended Dec 31, 2013, Cameron reported adjusted profit of $3.30 per share, overshooting the Zacks Consensus Estimate of $3.25 per share and up from $3.13 per share in 2012. Revenues of $9,838.4 million were 15.7% up from the year-ago period, while managing to beat the Zacks Consensus Estimate of $9,660.0 million.

 Segment Analysis

Drilling & Production Systems (DPS): Revenues for the DPS segment totaled $1,943.3 million in the fourth quarter, an increase of 39.4% from the year-ago period, while the DPS segment EBITDA rose 33.5% year over year to $318.7 million. The higher profitability could be attributed to strength in its subsea business.

Valves & Measurement (V&M): Quarterly revenues in Cameron's V&M segment totaled $527.5 million, down 5.3% year over year. The segment EBITDA decreased 10.0% year over year to $114.1 million. The negative comparisons can be attributed to slightly tepid infrastructure activity levels throughout the world.

Process & Compression Systems (PCS): Revenues in the PCS segment fell 1.8% year over year to $466.7 million. The segment EBITDA witnessed a year-over-year deterioration of 5.8% to $73.0 million, on the back of operational hiccups.

Backlog

During the quarter, Cameron received orders totaling $3,344.6 million, down 2.9% year over year, reflecting a 13.0% drop in the DPS segment. The composition of current order booking is 66% for DPS, 16% for V&M and 18% for PCS.

As of Dec 31, 2013, Cameron's total backlog stood at a record $11,537.6 million, up significantly from the year-earlier level of $8,597.2 million, driven by sharply higher backlog in the DPS segment.

Capital Expenditure & Balance Sheet

During the quarter, Cameron’s capital expenditures amounted to $214.1 million. As of Dec 31, 2013, cash and cash equivalents stood at $1,812.9 million, while long-term debt was $2,562.8 million (with debt-to-capitalization ratio of 27.0%).

Guidance

Cameron management provided its 2014 earnings per share guidance in the $3.60–$4.00 range, while the first quarter profitability is likely to be between 70 cents and 75 cents.

Zacks Rank & Stock Picks

Cameron – which counts FMC Technologies Inc. (FTI - Analyst Report) as its competitor – currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can look at Swift Energy Co. (SFY - Snapshot Report) and Warren Resources Inc. (WRES - Snapshot Report). These U.S. upstream energy operators – sporting a Zacks Rank #1 (Strong Buy) – have recorded solid growth and have the potential to rise significantly from the current levels.

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