Ensign Energy Services 2

Sound bite for Twitter and StockTwits is: Price probably cheap. The stock is cheap based on P/B Ratio and dividend yield. These are tests that do not involve estimates. The time to buy good companies is when they are cheap. They have now a stronger balance sheet since the Liquidity Ratio has moved above 1.00 and it is now at a healthier 1.53. I like this ratio to be at least 1.50. My main concern was previously the Liquidity Ratio. See my spreadsheet at esi.htm.

I do not own this stock of Ensign Energy Services (TSX-ESI, OTC- ESVIF), but I used to. I bought this stock in June 2012. Stock was rather cheap in June of 2012. I had been following this stock for some time. I sold this stock in December 2014 to buy Mullen instead. Details of why is in a December 2014 post. I know I would be selling Ensign at a loss, but I also could buy Mullen cheaply. This is my first review of this stock after selling it.

Under insider trading over the past year there has been 0.1M of insider buying and 0.4M of insider selling. Net insider selling is at 0.02% of the market cap. There is insider ownership with the CEO owing shares worth some $5.4M, the CFO owing shares worth $10.6M and the chairman owning shares worth around $260.7M. It is only the chairman that has a significant amount of the outstanding shares at 16.8%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.67, 18.03 and 21.38. These are higher than the 10 year corresponding ratios at 10.10, 14.99 and 14.29. The current P/E Ratio is 62.37 and is based on a stock price of $11.85 and 2015 EPS estimate of $0.19. This stock price testing suggests that the stock price is relatively expensive.

Analysts are expecting EPS to drop significantly in 2015. The EPS has dropped significantly in the first quarterly results. Analysts also expect EPS to begin to rise again in 2016 with a P/E Ratio at 28.90 based on current stock price of $11.85 and 2016 EPS estimate of $0.41. The P/E Ratio would be at 14.63 for 2017 with a stock price of $11.85 and 2017 EPS estimate of $0.48. So the current high P/E Ratio will not last and probably is not a valid test.

I get a Graham Price of $7.81. The 10 year low, median and high median Price/Graham Price Ratios are 0.82, 1.07 and 1.29. The current P/GP Ratio is 1.52. This testing suggests that the stock price is relatively expensive. However, the Graham Price for 2016 would be $11.47 and its P/GP Ratio would be 1.03 suggesting a better P/GP Ratio and a relatively reasonable stock price.

The 10 year Price/Book Value per Share Ratio is 1.44. The current P/B Ratio is 0.83 a value some 42% lower than the current P/B Ratio. The current P/B Ratio is based on BVPS of $14.25 and a stock price of $11.85. This test suggests that the stock price is relatively cheap. Also a stock would be absolutely cheap when the P/B Ratio is below 1.00. This would mean that the stock is selling below is break up worth.

Really the only dividend yield test needed on this stock is looking at the historically high dividend yield. The historically high dividend yield is 3.90% and the current dividend yield is 4.05%. The current dividend yield is based on a stock price of $11.85 and dividends of $0.48. This testing suggests that the stock price is relatively cheap.

The 10 year Price/Cash Flow per Share Ratio is 7.01 and the current P/CF Ratio is 5.81 based on 2015 CFPS estimate of $2.07 and a stock price of $11.85. The current P/CF Ratio is some 17% lower than the 10 year P/CF Ratio. This testing suggests that the stock price is relatively reasonable. To be cheap under this test, the current P/CF Ratio would have to be 20% lower than the 10 year P/CF Ratio. It is getting close.

The 10 year median Price/Sales Ratio is 1.60. The current P/S Ratio is 1.13 based on 2015 Revenue estimate of $1.603M or $10.52 per share and a stock price of $11.85. The current P/S Ratio is some 30% lower than the 10 year median ratio. This testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find few Buy and few Underperform recommendations and lots of Hold recommendations. The consensus is a Hold recommendation. The 12 month consensus stock price is 11.80. This is a price below the current price of $11.85. The 12 month stock price of $11.80 implies a total return of 3.63% with a capital loss of 0.42% and dividends of $4.05%.

This is the second of two parts. The first part was posted on Wednesday, June 17, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

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 Energy.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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