Hercules Offshore provides shallow-water drilling and marine services internationally. The company serves integrated and independent energy companies and oil and natural gas operators.
Investment Impacts (help)
USA Country Analysis ► (edit / improve) The United States (US) has a highly productive, capitalist economy and is the largest and most diverse market in the world. Currency Analysis: the US dollar (USD) has the potential to increase in value especially versus the Australian and Canadian dollar because of the significant potential of undervalued companies (see investment flows analysis). Investor Survey: the economic environment is very favorable for long term economic growth due to high scores on economic freedom and economic diversity. Trade Analysis: China, Japan, Mexico, and Canada are the top US trading partners, while the leading export and import are electrical machinery and vehicles, respectively. Commodity Analysis: The US produces a significant amount of coal and wheat for use at home and as an export. However, the US consumes a larger amount of oil, which contributes to their trade deficit. SWOT Analysis: The leading US strength is its entrepreneurial culture, while the main weakness is high health care cost. Energy independence has the opportunity to propel growth, while the housing crisis may lower growth. Profit Conclusion: An undervalued currency, high investment flow potential and favorable business environment lead to a positive outlook for US investments, which will also benefit from positive international actions.
Commodity Investment Analysis
Natural Gas Commodity Analysis ► (edit / improve) Natural gas is a significant fuel source used to produce electricity in the world. It primarily consists of methane gas. Commodity Analysis: Natural is rated a hold. Natural gas demanders have a high potential to increase in value, while natural gas suppliers also have high potential in increase in value. Investor Survey: Natural gas’s long term growth potential is favorable due to high scores on difficulty to expand in the short term and sensitivity to price changes. SWOT Analysis: Strength: Natural gas is a cheap fuel source, especially in the US; Weakness: natural gas produces considerable pollution. Opportunity to grow: natural gas could produce hydrogen fuel, which is a substitute for gas in cars; Threats to growth: alternative forms of clean energy may compete with natural gas. Profit Conclusion: The commodity analysis hold rating indicates that natural gas should stay the same price over the short term, whereas a moderately favorable investor survey means natural gas should increase in price over the long term.
Latest News
Top 10 Oil and Gas Stocks of the Week: GLRP, LEI, CPE, ROSE, TTI, HERO, VQ, AEZ, PQ, CFW (Mar 07, 2010) 1267973921|%e %b %Y, %H:%M %Z|agohover
Hercules Offshore provides shallow-water drilling and marine services internationally.. The company serves integrated and independent energy companies and oil and natural gas operators., … ► (edit / improve)
Importance of the Industry Analysis? WikiWealth's industry analysis evaluates the major industry characteristics that affect investments within that industry. Company specific factors drive the performance of individual companies, but macro-economic industry factors can affect the performance of entire groups of stocks.
Warren Buffett Quote: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
No matter the quality of your business, industry economics is an important factor in any investment decision.
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WikiWealth.com Industry Description: The energy industry includes companies whose sales derive from the production and sale of energy related products and services such as the extraction, manufacturing, refining, and distribution of energy. Read More.
WikiWealth.com Profit Analysis: The best way to profit from energy stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, energy stocks tend to outperform the general stock market, because general consumer demand increases.
Energy stocks are most sensitive to commodity prices, which are an indicator of future energy demand. Energy commodity speculators try to predict the demand and supply of commodities, but their generally set prices too high during economic expansions and too low during economic recessions. Therefore, the best time to make energy stock investments is during economic recessions. The best time to sell energy stocks is in the late stages of economic expansions, when energy stocks and commodity prices are above their fair prices. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. Click for more information: stock research ratings.
WikiWealth.com Industry Analysis: The energy industry tends to be very sensitive to economic changes. Demand for energy is inelastic, so it does not easily change with changes in price. Therefore, changes in supply have a large impact on the price of fuel. Some sectors of the energy industry require large investments over an extended period of time, which causes issues with adjusting energy supply with demand, so prices tend to be volatile. Energy industry stock prices tend to move in line with energy commodity prices. During economic recessions, consumers may decrease expenses slightly, but the majority of energy costs are not flexible, because they are needed for everyday living.
Since energy needs are inflexible, stock prices are less influenced by changed in the economy. However, commodity prices such as oil or natural gas have a direct impact on energy stock investments. Changes in commodity prices are a result of changes in supply and demand. Recently, oil prices increased, because of the demand for oil from emerging markets. Unfortunately, the global recession decreased growth estimates and demand until oil prices fell from 160 dollars a barrel to 35 dollars a barrel.
Part of oil price changes are do to speculation. When speculators increase the price of oil, many alternative sources of fuel become profitable. When companies make investments in these alternative sources of fuel, supply increases until energy prices start to fall. If prices fall too far, then the alternative fuel sources become less profitable and shutdown, which decreases demand. Stock prices rise and fall with energy commodity prices.
| Energy Financial Statistics |
Stat |
Notes |
| Stock Rating |
Buy |
… |
| Potential (safety margin) |
64% |
High ~ Good for investors |
| WACC Analysis |
8% |
Low ~ Good for investors |
| Comparative Industry Multiples |
Stat |
Notes |
| Revenue EV Multiple |
1.1x |
Low ~ Good for investors |
| EBITDA EV Multiple |
4.6x |
Low ~ Good for investors |
| EBIT EV Multiple |
5.5x |
Low ~ Good for investors |
| Cash Flow EV Multiple |
14.0x |
… |
| Book Value EV Multiple |
1.1x |
Low ~ Good for investors |
| Discounted Cash Flow |
Stat |
Notes |
| Revenue Growth |
21% |
High ~ Good for investors |
| EBITDA Margin |
28% |
High ~ Good for investors |
| EBIT Margin |
21% |
High ~ Good for investors |
| Cash Flow Margin |
5% |
… |
| Taxes Rate |
37% |
… |
| Debt-Equity Ratio |
22% |
Low ~ Good for investors |
| ROIC |
5% |
… |
| Reinvestment Rate |
15% |
… |
| WACC Discount Rate |
Stat |
Notes |
| Risk Free Rate |
4% |
Low ~ Good for Investors |
| Cost of Debt |
7% |
Low ~ Good for Investors |
| Equity Risk Premium |
5% |
… |
| Debt Required Return of Debt |
4% |
Low ~ Good for Investors |
| Required Return of Equity |
9% |
… |
1 WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.
2 Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.
What is a SWOT Analysis? The SWOT Analysis evaluates the strengths, weaknesses, opportunities, and threats involved in a business or project. The SWOT analysis is essential to understanding the many different risk and rewards of any investment. Add your content to the SWOT Analysis, below. Also see our SWOT Analysis tutorial for help.
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The quality and quantify of SWOT statements has a direct impact on stock ratings, and thus, company investments. A professional SWOT analysis cost a minimum of $150. WikiWealth's SWOT analysis is free and open to improve / edit. WikiWealth has a range of skills and experience to complete any SWOT analysis or related financial request. See our professional services for more information.
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Strength (helpful to business - internal origin)
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Weakness (harmful to business / internal origin)
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Threat (harmful to business - external origin)
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How does this work? The WACC Discount Rate (weighted average cost of capital) is the rate used to determine business risk of a company. WikiWealth uses an industry average WACC calculation to increase the stability and accuracy of this calculation. Click on the Experimental Mode to form your own conclusion. Also see the experimental mode tutorial.
Importance?
The result of this calculation is an essential input for the discounted cash flow analysis. This method is widely used by investment professionals to determine the correct price of investments using the discounted cash flow analysis.
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How does this work? The Discounted Cash Flow (DCF) analysis computes a value based on the present value of all future cash flows generated by the business. The DCF tool is widely used by professionals in the financial services industries. Click on the Experimental Mode to form your own conclusion. Also see the experimental mode tutorial.
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This analysis is never given away freely, because it is expensive and complicated. Many investment professionals charge hundred of dollars just to see the results from this approach, but WikiWealth allows everyone to view and manipulate this analysis freely. This is one of the most important elements of WikiWealth's three Wall Street approaches used to determine the correct fair value of an investment.
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How does this work? The Comparative Value Analysis helps to determine the value of a company by comparing their financial ratios to the ratios of relevant peer groups. This method is also referred to as the relative value or Enterprise Value Multiple analysis. Click on the Experimental Mode to form your own conclusion. Also see the experimental mode tutorial.
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This method is widely used by investment professionals to determine the correct price of investments, especially initial public offerings (IPOs). It is one element of WikiWealth's three Wall Street approaches used to determine the correct fair value of an investment.
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How does this work? The Warren Buffett Intrinsic Value Analysis, developed exclusively by WikiWealth, tries to mimic the valuation approach used by Warren Buffett, arguably the greatest investor of all time. Click on the Experimental Mode to play around and make your own conclusions: Experimental Mode tutorial.
Importance?
This method is unique and experimental, but extensive testing on over 3,200 companies confirms the results to be surprisingly accurate and consistent with more advanced approaches. If the greatest investor of all time can consistently beat the stock market, then his methods are worth your attention. WikiWealth is the first and only company to utilize this approach to investing.
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