Varco International / ORANGE
Nature of business: Makes instruments and equipment used in oil and gas drilling. Total employees: 1,140 In Orange County: 230 Stock listing in The Times: On NYSE as “Varco” Ticker symbol: “VRC” Friday’s stock close: $6.50 One-week change: Down $0.25 *Analyst review: “Computerization and instrumentation of drilling rigs provides tremendous opportunities as the major oil companies and independents alike continue to search for ways to reduce their drilling costs. Varco’s systems provide ways to increase rig efficiency, reduce down time and stave off potential problems that may interrupt the drilling process. We believe the major oil companies will accelerate natural gas drilling in 1994, which would bring U.S. drilling activities closer to normal. At the same time, both gas and oil drilling contractors will be seeking to upgrade their equipment in order to qualify for potential jobs. We estimate that Varco’s earnings could double in 1994 and triple in 1995.”
-Kenneth S. Miller, analyst / Lehman Brothers Inc., New York
SALES VS. PROFITS Chart amount in millions
1990 1991 1992 1992 1993 Revenue $132.1 $216.6 $173.0 $47.3 $45.8
1990 1991 1992 1992 1993 Profit $8.7 $14.0 $2.3 $4.5 $1.3
*Corporate outlook: “The oil-drilling industry began dropping off in 1991 and leveled out in 1992. Since then, it’s held steady at a lower level of activity. But we are continually adding to our product line computerized equipment that will make drilling safer and more productive. In turn, making drilling more cost effective will help us remain profitable over the long run.”--Richard A. Kertson, CFO
* RETURN ON INVESTMENT: 3-YEAR SUMMARY AND YEAR-TO-DATE:
Fiscal year ending Dec. 31 Dec. 31 Dec. 31 1ST qtr. 1990 1991 1992 1992 52-week high $13.75 $12.50 $7.63 $7.63 52-week low $5.63 $6.00 $3.88 $4.88 Book value per share $4.46 $4.31 $4.37 $4.39 Price per share $8.50 $5.88 $4.25 $5.00 Net profit per share $0.33 $0.45 $0.07 $0.13 Price-to-earnings ratio 25:1 13:1 60:1 10:1 Avg. return on investor equity 9.2% 9.9% 1.6% 12.5%
Fiscal year ending 1ST qtr. 1993 52-week high $6.63 52-week low $4.13 Book value per share $4.41 Price per share $6.50 Net profit per share $0.04 Price-to-earnings ratio 40:1 Avg. return on investor equity 3.5%
For more information call or write: Varco International, 743 N. Eckhoff St., Orange, Calif., 92668. (714) 978-1900. Source: Varco International ; Bloomberg Business News.
