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Integration Drives Newpark Resources Inc. (NR) Business Model

A single-window service capability is a competitive advantage in the Oil Well Services & Equipment Industry. Industrial clients stand to benefit by developing business relationships with integrated solution providers. The supplier company can cover its marketing and infrastructure costs through multiple revenue lines.

This company operates throughout North and Central Americas, as well as in Europe and North Africa. It has three lines of important services for companies engaged in exploring and operating oil and gas reserves under the earth’s surface. The first revenue line relates to supplying fluids and technical services related to drilling operations. The second business of the company is to supply prefabricated equipment used at drilling sites. Finally, the company is able to dispose of waste materials produced by drilling, including debris contaminated with radioactive material. Investors will only rarely find small capital stock with such business potential in the Energy Sector.

The Price to Free Cash Flow on Trailing Twelve Months Basis is under 8 against over 35 for the Oil Well Services & Equipment Industry. The five-year growth rate in Earnings per Share is more than twice that of the industry. It is also far superior to the Energy Sector in this key parameter.

The management has announced new funding arrangements with its bankers for its operating and long-term needs. This development will lower finance costs and give the company better options for future growth. More than 90% of the stock is owned by institutions. There is consensus amongst analysts that the stock will outperform, and that it is worth holding.

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