Smith International Oversold

Houston-based Smith International, Inc. (SII - Analyst Report) is a major oilfield services company, engaged in providing a comprehensive line of products and engineering services to the oil and gas exploration and production industry, as well as to the petrochemical and other related industries.

Smith International's fourth quarter earnings, though weaker-than-expected, were above year-earlier levels, driven by gains from its August acquisition of W-H Energy's operations. Revenue and earnings grew 33% and 31%, respectively, on the back of improved performance from all three segments.

Looking ahead, the company's strong cash flows, low capital needs, and diverse product portfolio with a growing international presence should help it weather the current downturn better than most of its peers. Our Buy recommendation remains unchanged, though we have lowered our estimates and price target.

Read the full analyst report on SII