Company Reports

We maintain our $37 fair value estimate of no-moat Tenaris after the company closed 2023 with a robust fourth quarter.

Tenaris is the largest provider of oil country tubular goods, the steel tubing used to construct oil and gas wells. It controls nearly half the global OCTG market, providing premium and nonpremium solutions for offshore and onshore applications.

Tenaris is the largest provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It controls nearly half the global OCTG market, providing premium and nonpremium solutions for offshore and onshore applications. The firm manages low-cost high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. The firm continues pursuing capacity expansions in North America and the Middle East.

Tenaris’ third-quarter results were weaker compared with a very strong first half, as subdued North American markets contributed to declining firm performance that commenced near the end of the second quarter. Total revenue dropped 21% quarter over quarter while the firmwide EBITDA margin contracted over 350 basis points to 31%. Reduced volumes and unfavorable pricing dynamics both contributed to the sequential decline, mainly due to subdued drilling and completion activity throughout North America. We expect these dynamics will persist through year-end but remain optimistic regarding Tenaris’ longer-term prospects, especially as international and offshore markets continue to deliver robust activity. We therefore maintain our $37 fair value estimate and no-moat rating following the results. Our euro-denominated fair value estimate increased slightly to EUR 17 from EUR 16 due to currency movements.

Tenaris’ second-quarter results rounded out an overall robust first half for the firm. Revenue expanded 45% year over year but contracted slightly compared with last quarter, reflecting decelerating drilling and completions activity in North America that will likely persist through year-end. Lower sales volumes contributed to a slightly contracted EBITDA margin, which dropped about 100 basis points to 35%. Continued activity declines in North America—composing more than 50% of overall sales—will likely elicit further weakness from Tenaris in the second half, though we expect heightened international and offshore activity will slightly offset these headwinds. We maintain our $37 per share fair value estimate (EUR 16, down from EUR 20 due to foreign-exchange movements) and no-moat rating following results.

Tenaris is the largest provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It controls nearly half the global OCTG market, providing premium and nonpremium solutions for offshore and onshore applications. The firm manages low-cost high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. The firm continues pursuing capacity expansions in North America and the Middle East.

After incorporating Tenaris’ first-quarter results, we’re raising our fair value estimate to $37 (EUR 20) from $32 (EUR 15). Our improved outlook for Tenaris’ profitability potential drives most of the increase. By our estimate, the firmwide adjusted EBITDA margin will average 29% over the next five years, compared with our prior estimate of 24%. In short, we expect a more favorable product mix will offset normalizing tubes demand over the next five years. We still expect the currently advantageous pricing dynamics will abate over the next few quarters, however, we’re now more confident the firm will secure more margin-accretive revenue streams, further supported by internal cost management initiatives. Customers continue converting to Tenaris’ Rig Direct solution, which will optimize the firm’s demand planning, especially as product adoption persists. Both factors reflect longer-term developments, so most of the margin improvement falls around 2025 and beyond.

Tenaris is the largest provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It controls nearly half the global OCTG market, providing premium and nonpremium solutions for offshore and onshore applications. The firm manages low-cost high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. The firm continues pursuing capacity expansions in North America and the Middle East.

No-moat Tenaris performed exceptionally in the first quarter, posting record revenue of $4.1 billion (increasing 75% year over year and 14% sequentially) while expanding the firmwide EBITDA margin to 36%. We’ll incorporate the firm’s full operating and financial results shortly, but for now, our $32 (EUR 15) fair value estimate is unchanged.

After incorporating Tenaris’ full results for fiscal 2022, we’re raising our fair value estimate to $32 (EUR 15) per share from $29 (EUR 15). Our no-moat and stable moat trend ratings are unchanged following results. The firm had an exceptional fourth quarter, posting quarterly records for revenue and profitability. Total sales in 2022 were $11.8 billion, nearly doubling year over year. The firm also maintained impressive profitability with a firmwide EBITDA margin of 35% compared with 37% in 2022, and a five-year historical average of 21%.

Tenaris is the largest provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It controls nearly half the global OCTG market, providing premium and nonpremium solutions for offshore and onshore applications. The firm manages low-cost high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. The firm continues pursuing capacity expansions in North America and the Middle East.

Tenaris had an exceptional fourth quarter, posting quarterly records for sales, EBITDA, and net income. At $3.6 billion, revenue increased 76% year over year and 22% sequentially while the fourth-quarter EBITDA margin topped 35% (more than double the firm’s historical average). We’ll incorporate the firm’s full financial and operating results shortly, but after our first look we maintain our $29 (EUR 15) per share fair value estimate and no-moat rating.

Tenaris posted a solid third quarter as strong tubes demand continues to support elevated pricing around the world. Total revenue increased 70% year over year and 6% sequentially. The firmwide operating margin was 27%, jumping nearly 400 basis points compared with last quarter. We’re raising our fair value estimate to $29 (EUR 15) from $26 (EUR 13) following the results. Our no-moat rating and stable moat trend are unchanged.

Tenaris is the largest provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It controls nearly half the global OCTG market, providing premium and nonpremium solutions for offshore and onshore applications. The firm manages low-cost high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. The firm continues pursuing capacity expansions in North America and the Middle East.

Tenaris posted very strong results in the second quarter. Total revenue was $2.8 billion—a level not seen since 2013—representing an increase of 83% year over year and 18% sequentially. Firmwide operating margin also expanded to 23% (compared with 20% last quarter), also a level not seen since 2013.

Tenaris is a leading provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It maintains dominant share across premium and nonpremium OCTG markets. The firm manages low-cost, high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. Recent capacity expansions in North America (Tenaris’ largest geographical market) via the IPSCO acquisition will bolster the firm’s Rig Direct program, advancing its strategy for production and overall supply chain optimization.

Tenaris is a leading provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It maintains dominant share across premium and nonpremium OCTG markets. The firm manages low-cost, high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. Recent capacity expansions in North America (Tenaris’ largest geographical market) via the IPSCO acquisition will bolster the firm’s Rig Direct program, advancing its strategy for production and overall supply chain optimization.

Tenaris posted very strong results in its first quarter with total revenue reaching $2.4 billion, the highest since 2014. Operating margin expanded to 20% this quarter, double its 2021 average. We’ll incorporate the firm’s operational and financial results into our model shortly, but for now our $23/EUR 11 fair value estimate is unchanged. We maintain our no-moat, stable trend rating.

After reviewing Tenaris’ full financial results for 2021 and strategy for 2022 onward, we’re raising our fair value estimate to $23 (EUR 11) from $19 (EUR 9). We maintain our no-moat rating and stable moat trend.

Tenaris is a leading provider of oil country tubular goods, or OCTG, the steel tubing used to construct oil and gas wells. It maintains dominant share across premium and nonpremium OCTG markets. The firm manages low-cost, high-quality manufacturing operations on nearly every continent, enabling it to reap the benefits of a globalized supply chain while maintaining a localized presence. Recent capacity expansions in North America (Tenaris’ largest geographical market) via the IPSCO acquisition will bolster the firm’s Rig Direct program, advancing its strategy for production and overall supply chain optimization.