Friday, October 14, 2011

Ensign Energy Services

I do not own this stock (TSX-ESI). This company is a bit different from the other ones I have been reviewing, as they provide services to the oil and gas industry, rather than being in the oil and gas industry. They are also different from the oil and gas companies I have been lately blogging on as they have increased their dividends each year. They on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices).

Their current dividend at 2.57% is higher than normal. It is normally between 1 and 2%. Dividend growth has been good over the past 5 and 10 years, growing at 15% and 16% per year, respectively. But dividend increases have really slowed down over the past few years, and the increase in 2010 was just 4.4%. This year it has been better at 6.3%.

The Dividend Payout Ratios are good. The 5 year median DPR for earnings is 20% and the cash flow is 16%. It was higher in 2010 at 45% and 20%, respectively. It is expected to be better this year at 27% and 13%, respectively.

Growth over the past 10 years has not been bad for this company. However, there has been no growth over the past 5 years. However, they do have positive earnings and cash flow. For example, the 5 and 10 year growth in earnings is a negative 6.3% and (positive) 3.5% per year, respectively. The 5 and 10 year growth in cash flow is negative 2.3% and (positive) 10.4%.

As far as total return is concerned, if you had been invested in this company over the past 5 you would not have made any money, even when dividends are included. The dividend portion of the return on this company over the past 5 and 10 years run at around 1.8% to 2% per year, so they do not add a lot.

You would have made money if you had been invested in this company over the past 10 years, probably at 7 to 9% per year. This is not bad, considering what other companies have done. The TSX growth over the past 5 and 10 years is 3.58% and 4.17%, per year, respectively.

The current debt ratios are fine. The Liquidity Ratio is a bit low at 1.22, but the Asset/Liability Ratio at 3.29 is great. Both the current Leverage and Debt/Equity Ratios are fine at 1.44 and 0.44. The company does not have much in the way of debt. (See my site for further information on Debt Ratios.)

The last thing to talk about is the Return on Equity. The ROE, to the end of 2010, is 7%. This is a little low. The 5 year median ROE is better at 14.5%. The ROE covering the 12 months ending at the 2nd Quarter of June 30, 2011, is also better at 10.2%.

On Monday, I will look at what my spreadsheet says about the current stock price. Then I will finish blogging about oil and gas stocks with a review of Suncor Energy.

With headquarters in Calgary, Alberta, Ensign is an industry leader in the delivery of oilfield services worldwide to the oil and gas industry. They operate in North and South American, Middle East, South East Asia, Africa, Australia and New Zealand. Its web site is here Ensign. See my spreadsheet at esi.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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