Smith's Margins Tell the Story

It's difficult to dispute the contention that a company that performs well for customers also tends to perform well for its investors. One oilfield supplier that clearly enjoys the confidence of its customers to an almost unmatched degree -- and whose stock price has outperformed the benchmark Philadelphia Oil Service Index (OSX) over the last one, three and five years -- is Smith International (SII).<!--more-->

To be sure, Smith does not garner clients' accolades by simply talking a good game. Our belief is that the company maintains one of the best reputations in the industry in part by carefully choosing the segments in which it knows it can effectively add value (while avoiding most others).