Oil States International (OIS) Stock Analysis & Winston Score

Oil States International makes equipment and provides services for oil and gas drilling and production. Its two main business segments are Wellsite Services — which includes tools and services used at the drilling site — and Downhole Technologies, which makes specialized parts that go inside oil wells. Its customers are oil and gas companies drilling on land and offshore around the world. The company earns revenue by selling equipment and charging for services on a project basis, meaning income rises and falls with drilling activity levels. Oil States operates globally, with a significant presence in North America as well as international markets, and generates roughly $500 million in annual revenue. Its main competitive advantage is its specialized, engineered products that are difficult for customers to easily replace. The biggest risk the company faces is its heavy dependence on oil and gas capital spending, which drops sharply when energy prices fall — as reflected in its near-zero operating margins today.