Ensign Energy Services

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. I do not like dividend stocks paying dividends that they cannot afford. Therefore I am still happy with my switch from this stock to Mullen. The stock price is cheap, but I think that it is cheap for a reason. See my spreadsheet on Ensign Energy Services.

I do not own this stock of Ensign Energy Services (TSX-ESI, OTC-ESVIF). I bought this stock in June 2012. Stock is a good one and 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 here. I know I would be selling Ensign at a loss, but I also could buy Mullen cheaply.

The main thing I do not like about this company is their paying of dividends that they cannot afford. Both last year and this year they had an earnings loss, but they continue to pay dividends. Analyst expect two more years of losses before it can earn a profit. Analysts expect that the 2017 and 2018 will be earnings loss years. They expect positive earnings in 2019 of $0.20. This is still way below current dividends.

On the other had they can still fund their dividends through cash flow, but analyst feel that anything over 40% is too high. The Dividend Payout Ratio for Cash Flow in 2016 was 43%. The 5 year median is still low at 19%, but the one for 2016 is high. They expect that dividends will continue to be covered by CFPS in the 30% range for the next couple of years.

The other thing I do not like is the Liquidity Ratio which for 2016 was 0.96. When you add in cash flow after dividends the ratio is still low at 1.26. I like this to be at least 1.50. The 5 year median for this ratio is 1.03, but this ratio has fluctuated a lot as it was 1.77 last year. The other debt ratios are fine.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.26, 10.92 and 12.58. The 10 year values are 9.20, 11.86 and 15.01. The historical ones are 8.86, 12.41 and 16.67. They are quite similar. The current ones are probably lower due to the last two years of EPS losses. The current P/E Ratio is -9.38. The P/E Ratio for 2018 is -17.13. We have a positive one of 34.25 for 2019, but I think that two years hence in estimates is a long stretch. So let's move on.

I get a Graham Price of $7.23. The 10 year low, median and high median Price/Graham Price Ratios are 0.67, 0.99 and 1.26. The current P/GP Ratio is 0.95 based on a stock price of $6.85. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.33. The current P/B Ratio is 0.59 based on BVPS of $11.63 and a stock price of $6.85. The current P/B Ratio is 56% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap. Also when the P/B Ratio is below 1.00 the company is theoretically selling below its breakup value. This is also a positive point.

I get a historical median dividend yield of 1.80%. The current dividend yield is 7.01% based on dividends of $0.48 and a stock price of $6.85. The current dividend yield is some 289% higher than the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations they are all over the place with Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus is a Hold. The 12 months stock price is $9.30. This implies a total return of 42.77% with 7.01% from dividends and 35.77% from capital gains based on a stock price of $6.85.

A JCTY Staff Writer at JCTY News says that this company's Value Composite score is 33. It is closer to being undervalued than overvalued. Felix Olson on Simply Wall Street talks about debt levels at this company. I am concerned about lack of coverage of current liability by current assets. However, it does have enough cash flow. See what analysts are saying about this stock at Stock Chase. It is not a favourite.

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 Services.

The last stock I wrote about was about was Hardwoods Distribution Inc. (TSX-HWD, OTC-HDIUF)... learn more. The next stock I will write about will be MacDonald, Dettwiler & Associates (TSX-MDA, OTC-MDDWF)... learn more on Monday, May 29, 2017 around 5 pm.

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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