(CAM) - Company is expected to continue generating strong free cash flows

Cameron International has exceeded earnings estimates in six consecutive quarters, with year-to-year growth exceeding 43% in each of those periods. Seven analysts raised their estimates for this year, while five bumped up their numbers for next year. Over the past 90 days, this year's estimates have increased 12.6% to $2.69 per share, while next year's numbers have jumped 11.8%. Full Analysis Cameron International Corporation (CAM), previously known as Cooper Cameron Corporation, is a leading manufacturer of pressure control equipment used in onshore, offshore, and subsea applications for oil and gas drilling, production, and transmission. Upon the change in the corporate name in May 2006, the company also re-branded its three business segments into Drilling & Production Systems (DPS), formerly the Cameron segment; Valves & Measurement (V&M), formerly the Cooper Cameron Valves segment; and Compression Systems (CS), formerly the Cooper Compression segment. CAM remains well positioned to capitalize on the current cyclical upturn in oilfield activity levels. The company is especially poised for a recovery in the subsea market. Subsea products have seen an increase in interest and, as about one third of the DPS segment s income comes from the subsea products, we expect earnings in this segment to strengthen - especially due to the company s Christmas Tree production and pressure control systems. According to Zacks Equity Research Analyst Sheraz Mian, Cameron International has been able to take advantage of its leverage to the land drilling business, which continues to remain strong. During the first quarter of 2006, the company received several large orders relating to seven new offshore rig construction projects. Margins have been increasing, in part due to price hikes. The company has already announced one price hike during 2005 and Mian expects more in the near to medium term. Further, increased order activity in the valve business is expected to be particularly beneficial to margin expansion, given the high fixed-cost nature of that business. The company has also been further strengthening its valve business through acquisitions. The acquisition of Dresser's (DRC) Flow Control business for $217 million in cash during the last quarter of 2005 was in keeping with that strategy. Mian also likes the fact that the company remains in strong financial health with $663.3 million in cash on hand and a net debt-to-capitalization ratio of about 15.3%. Given the favorable macro environment, the company is expected to continue generating strong free cash flows (operating cash flow less capex) in the near to medium term. The company generated approximately $275 million in free cash flow last year, which primarily went towards acquisitions. The company has exceeded earnings estimates in six consecutive quarters, with year-to-year growth exceeding 43% in each of those periods. Seven analysts raised their estimates for this year, while five bumped up their numbers for next year. Over the past 90 days, this year's estimates have increased 12.6% to $2.69 per share, while next year's numbers have jumped 11.8%. The stock is cheap at 12.7x next year's estimate, well below the long-term growth rate of 20.31%, giving the stock a PEG ratio of 0.63. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. This important indicator is updated daily on Zacks.com and is available to Zacks Premium subscribers. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. | Blog Home| VitalStocks Home