Ensign Energy Services 2

I do now own this stock (TSX-ESI) as I scraped some money together and got 100 shares. I got this stock from a dividend list that I follow of Dividend Aristocrats (see indices).

Over the past year there has been little insider trading with very minimal insider buying and insider selling. Over the past 4 months, insiders have been retaining their options and this is positive. There are a number of insiders who own millions of dollars in these shares and have maintained or marginally increased their ownership over the past year. One officer owns or controls some $338M in shares at today’s prices.

Yes, they there seems to be a lot of outstanding options. The company also has Rights Deferred Share Units outstanding. Institutions have been behaving differently as they have decreased their ownership in this company by 5% over the past 3 months. There are some 78 institutions that own about 33% of the outstanding shares. (Insiders have marginally increased their ownership over the past 3 months by buying shares under the company plan or retaining options.)

The 5 year median low and high Price/Earnings Ratios are 9.13 and 15.55. The current P/E Ratio is just 8.01. (Note that the 10 year low P/E Ratio is higher than the 5 year one at 10.96.) The test shows a cheap stock price.

I get a Graham Price of $20.96. The current Stock price of $13.30 is some 37% lower than the Graham Price. The 10 year low difference between the Graham Price and Stock price is the Stock price being 12.5% lower. The 10 year median and high difference between the Graham price and the Stock price is the stock price being 11.6% and 38% higher than the Graham Price. This test shows a cheap stock price.

The 10 year median Price/Book Value Ratio is 2.20 and the current P/B Ratio is 1.13. The current Ratio is just 51% of the 10 year median ratio. This test shows a cheap stock price.

The current dividend of 3.16% is some 37% higher than the 5 year median of 2.3%. (The 10 year median dividend yield is even lower at 1.15%). This test shows a cheap stock price.

When I look at analysts’ recommendations I get Strong Buy, Buy and Hold. The overwhelming majority is Hold and the consensus recommendation is a Hold. One analyst says that the first quarterly revenue hit the highest quarterly level ever for this company. However, he has a Hold on this stock because of market uncertainty revolving around rigs moves. He also felt that estimates for 2013 should be moved down because of market uncertainty.

One analysts with a buy said the fundamentals of the company is pretty good. Another thought the whole sector has declined. There is a current article in the G&M that says “For the patient investor, a sector packed with value”, which talks mostly about this industry. The article quotes two analysts with Buy recommendations on this stock. See G&M article. Another analyst recently downgraded this stock from Buy to Hold as he felt its shares are no longer undervalued relative to peers. However, he also said that Ensign remains one of the more defensive stock for North American contract drillers.

Over the last 90 days, estimates have been trending down with EPS for 2012 decreased from $1.80 to $1.66 and 12 months stock price from $20.40 to $18.60. Still, the 12 month consensus stock price at $18.60 implies a total return of 43%. Personally, I can see why prices are trending downward. European debt problems are affecting everyone and there is no present solution for the problems. (Or, really there are no solutions that people are willing to do.)

To me, the positives are the relatively high dividend and the fact that the company recently increased the dividend by 10.5%. I like to buy when companies are relatively cheap. It is also great to buy in a market going down.

I also bought 200 shares of Automodular Corp (TSX-AM) with dividend income from my TFSA. This is a small cap I originally bought to invest bits of money held in my TFSA. See my most recent report on this company and see my spreadsheet at am.htm.

Ensign Energy Services Inc. is an industry leader in the delivery of oilfield services in Canada, the United States and internationally. They are one of the world's leading land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. 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.