NPK International Inc. (NYSE: NPKI)

Sector: Energy Industry: Oil & Gas Equipment & Services CIK: 0000071829
Market Cap 1.20 Bn
P/B 3.59
P/E 36.30
P/S 4.62
ROIC (Qtr) 8.54
Div Yield % 0.00
Rev 1y % (Qtr) 55.72
Total Debt (Qtr) 19.19 Mn
Debt/Equity (Qtr) 0.06
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About

Newpark Resources Inc., often referred to as Newpark, is a prominent player in the industry of supplying environmentally-sensitive products, rentals, and services to a diverse clientele. The company operates through three segments: Industrial Solutions, Fluids Systems, and Industrial Blending, although it exited the latter in 2022. This essay will provide an overview of Newpark's main business activities, revenue generation, and competitive position within the industry. Newpark's Industrial Solutions segment specializes in providing temporary worksite...

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Investment thesis

Bull case

  • Strong operating cash flow of 50.86M provides robust 2.65x coverage of total debt 19.19M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 35.64M provide 9.80x coverage of short-term debt 3.64M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 348.11M provides 18.14x coverage of total debt 19.19M, indicating robust asset backing and low credit risk.
  • Robust tangible asset base of 348.11M provides 5.92x coverage of working capital 58.83M, indicating strong operational backing.
  • Tangible assets of 348.11M provide robust 14.88x coverage of other current liabilities 23.39M, indicating strong asset backing.

Bear case

  • Operating cash flow of 50.86M barely covers its investment activities of (27.90M), with a coverage ratio of -1.82, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • High receivables of 57.36M relative to inventory of 9.67M (5.93 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 8.47M provides weak coverage of capital expenditures of 42.38M, with a 0.20 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 45.84M show weak coverage of depreciation charges of 23.96M, with a 1.91 ratio indicating high capital intensity and potential reinvestment needs.
  • Operating cash flow of 50.86M barely covers operating expenses of (331000) with a -153.65 ratio, suggesting thin operational efficiency margins and limited flexibility.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Oil & Gas Equipment & Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SLB Slb Limited/Nv 59.56 Bn 20.77 2.67 11.64 Bn
2 BKR Baker Hughes Co 59.13 Bn 22.85 2.13 6.09 Bn
3 FTI TechnipFMC plc 28.99 Bn 127.65 1.96 1.34 Bn
4 HAL Halliburton Co 28.83 Bn 22.47 1.30 8.13 Bn
5 WFRD Weatherford International plc 7.39 Bn 17.15 1.50 1.64 Bn
6 NOV NOV Inc. 7.09 Bn 48.90 0.81 2.34 Bn
7 VAL Valaris Ltd 6.32 Bn 15.83 2.61 1.09 Bn
8 KGS Kodiak Gas Services, Inc. 4.56 Bn 91.00 3.58 2.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.95 1.17
EV to Cash from Ops. EV/CFO 23.45 -3.30
EV to Debt EV to Debt 62.14 10.99
EV to EBIT EV/EBIT 26.02 4.49
EV to EBITDA EV/EBITDA 17.08 6.54
EV to Free Cash Flow [EV/FCF] EV/FCF 140.72 31.31
EV to Market Cap EV to Market Cap 0.99 1.36
EV to Revenue EV/Rev 4.60 2.02
Price to Book Value [P/B] P/B 3.59 1.73
Price to Earnings [P/E] P/E 36.30 20.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.42
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 5.49
Dividend per Basic Share Div per Share (Qtr) 0.00 0.26
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.68
Interest Coverage Int. cover (Qtr) -539.25 -10.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -20.77 -37.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -16.95 1,334.16
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.06
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 121.13 -12.71
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 23.68 19.66
EBIT Growth (1y) % EBIT 1y % (Qtr) 127.81 -26.68
EBT Growth (1y) % EBT 1y % (Qtr) 127.27 39.97
EPS Growth (1y) % EPS 1y % (Qtr) 121.74 27.30
FCF Growth (1y) % FCF 1y % (Qtr) -80.46 -867.31
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 34.65 5.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.64 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.10
Cash Ratio Cash Ratio (Qtr) 0.73 0.62
Current Ratio Curr Ratio (Qtr) 2.20 2.25
Debt to Equity Ratio Debt/Equity (Qtr) 0.06 0.88
Interest Cover Ratio Int Coverage (Qtr) -539.25 -10.19
Times Interest Earned Times Interest Earned (Qtr) -539.25 -10.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 26.90 16.47
EBIT Margin % EBIT Margin % (Qtr) 17.67 -0.62
EBT Margin % EBT Margin % (Qtr) 17.70 4.39
Gross Margin % Gross Margin % (Qtr) 36.60 30.41
Net Profit Margin % Net Margin % (Qtr) 12.70 2.67