Drilling equipment provider Trinidad Drilling Ltd. (TDG:TSX) recently released its 3Q11 results, which indicated that EBITDA for the period was C$69 million, slightly above the consensus estimate of C$67 million. Investment bank Raymond James responded to this information by reiterating its Strong Buy rating and C$11.00 target share price for the company. Trinidad's website indicates that it has drilling operations in most major oil and gas plays in North America.

Raymond James notes that the drilling equipment provider's stock has returned 48 percent since the end of September while the TSX has risen 9 percent. One factor that the investment bank attributes this strong stock performance to is effective management of capital. Although debt rose marginally during the quarter to C$604 million as a result of C$37 million in capital outlays and C$25 million in working capital investment, Trinidad expects to add five rigs in the next quarter, which should generate cash flow higher than the combination of dividend payments and capital expenditures.

Another factor that has been credited with the strong stock performance of Trinidad is rising profitability in its U.S. operations. Margins from the U.S. division have risen 730 basis points to reach 45.5 percent, as certain contracts were renewed at rates that more closely mirror rates in the spot market.

The C$11.00 target share price provided by Raymond James is based on a 6.2 times multiple of estimated EV/EBITDA and a 12.5 times multiple of estimated 2012 earnings. Trinidad Drilling Ltd.'s stock closed at C$8.27 on November 14 and hit a 52-week high/low of C$11.21 and C$4.86, respectively.