Vallourec S.A.

VLOWY

Steel · Basic Materials

Price

$4.86

+0.12 (+2.51%)

Market Cap

$28.49B

Exchange

Other OTC

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Share count rising — dilution

+940.7% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 600.6M (2021) → 6.25B (2025)

Vallourec is a French company that makes steel tubes and pipes used in the oil and gas industry. Its main products are seamless steel tubes — hollow metal cylinders with no welded seams — which are used to drill for oil and natural gas underground. Energy companies around the world are its primary customers, and Vallourec is one of the largest producers of premium tubular products globally.

The company earns revenue by selling these steel tubes directly to energy producers and drilling contractors. Vallourec operates manufacturing plants across Europe, Brazil, and the United States, making it a truly global business. Its competitive edge comes from the technical precision required to make high-pressure, high-temperature tubes, which creates a barrier for cheaper competitors. The main risk is that demand for its products is closely tied to oil and gas drilling activity, so when energy prices fall and companies cut drilling budgets, Vallourec's sales can drop sharply.

Winston Score History

Score breakdown

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Quality

Gross Margin

31.6%

Modest — 31.6% gross margin

Operating Margin

16.3%

Healthy — 16.3% operating margin

ROCE

4.0%

Weak — 4.0% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-9.5%

Shrinking sales (-9.5% YoY)

EPS YoY

-59.0%

Earnings shrinking (-59.0% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

139%

Turns 139% of profit into real cash

FCF Margin

9.7%

Modest free cash flow (9.7%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

0.41

Conservative — low debt load (0.41)

Interest Cover

13.17x

Comfortably covers interest (13.2x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

59.6x

Expensive — P/E 59.6

P/E over 35. The market is pricing in heavy, sustained growth.

P/E vs Forward

+50.2

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (59.6 → 9.3)

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Dividends

Not applicable for this business.

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