Key Energy Services (NYSE:KEG) - Latest Report Shows "Right Direction"

Based on its new quarterly report, Houston-based onshore, rig-based well servicing contractor Key Energy Services (NYSE:KEG) is showing renewed signs of sales growth. 

Agora Financial expert editor Chris Mayer dug deeply into the numbers and had the following opinion:

I mentioned that sales figures confirm that overseas markets are where the growth is for oil field services. Key Energy Services (NYSE:KEG) is Exhibit A. The stock just reported earnings last week and is not far off its 52-week high. While Key expects sales growth of 15-20% this year in the U.S., it expects 50-60% growth overseas — in particular from Russia, Argentina and Mexico.

The other key takeaway here is that the recovery in Key’s business is under way. As CEO Richard Alario put it: “As of last week, the Baker Hughes U.S. land-based rig count was up 31% from where we began the fourth quarter. Although the oil-directed rig count is up 46% within this time frame, our larger customers have just recently become more active. In addition to an improving oil market, industrywide activity in the U.S. gas market has increased 25% since the beginning of the fourth quarter.”

This quarterly report gave us more indication that things are moving in the right direction here. The stock is still cheap based on potential cash flow and earnings in the next up cycle.

Mayer provides regular research and updates on companies like Key Energy Services in his newsletter, Mayer’s Special Situations. More details are available at the Agora Financial reports page. In July, Mayer will also be speaking at the Agora Financial Investment Symposium in Vancouver. You can find details about the event here.