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 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. I know I would be selling Ensign at a loss, but I also could buy Mullen cheaply. See my report here.
I noticed a couple of things in doing my spreadsheet. One is that they cannot cover their dividends now or any time soon in the future by earnings. Another thing is that their Liquidity Ratio is lousy. If the Liquidity Ratio is below 0, then current assets cannot cover current liabilities. For 2017 the ratio is 0.51. However, the company does have good cash flows and if you add in cash flow after dividends the ratio becomes 2.35 a very good ratio.
They used to have some good growth in dividends. It has really slowed down lately as they are having trouble making a profit. Currently the dividends are very high and the increases are very low. The last dividend increase was in 2015 and it was for 2.1%. The dividends have been flat since that time. See dividend growth historically in the chart below.
They cannot cover their dividends with earnings. However, the Dividend Payout Ratio for CFPS is just 5.5% which is a very good ratio. The 5 year coverage is just 13%. Generally speaking you want the DPR for CFPS to be 40% or less.
The Total Return is show below for years of 5 to 26. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
Over the longer term shareholders have done well with this stock. However, it hit its high in 2008 and never went back there. Earnings have been going down since 2012 as has the stock price.
| Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|
| 5 | 2.71% | -11.50% | -15.89% | 4.40% |
| 10 | 4.06% | -4.11% | -8.22% | 4.10% |
| 15 | 10.84% | 2.80% | -1.67% | 4.47% |
| 20 | 13.23% | 4.62% | 0.57% | 4.05% |
| 22-25 | 16.50% | 24.75% | 14.05% | 10.70% |
| 26 | 26.16% | 15.11% | 11.05% |
The 5 year low, median and high median Price/Earnings per Share Ratios are all negative. The corresponding 10 year ratios are 9.20, 11.55 and 15.01. The historical ratios are 8.59, 12.36 and 16.62. However, I can do no testing with P/E Ratios as the EPS was negative since 2015 and is expected to be negative in the future.
I cannot get a Graham Price because of the earnings losses over a large period. That is earnings losses three years in the past and 3 years into the future.
I get a 10 year median Price/Book Value per Share of 1.29. The current P/B Ratio is 0.57 based on Book Value of $1,659M, Book Value of $10.57 and a stock price of $6.01. The current P/B Ratio is some 56% lower than the 10 year median. This stock price testing suggests that the stock price is relatively cheap.
A good P/B Ratio is one of 1.50. If a P/B Ratio is 1.50 or below, the stock price will be considered cheap. If the P/B Ratio is at or below 1.00, the stock is selling below its theoretical Break-up value. In this case the stock price is considered very cheap.
I get an historical median dividend yield of 1.84%. The current dividend yield is 7.99% based on dividends of $0.48 and a stock price of $6.01. The current dividend yield is some 334% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.26. The current P/S Ratio is 0.87 based on 2018 Revenue estimate of $1,080M, Revenue per Share of $6.88 and a stock price of $6.01. The current ratio is some 31% below the 10 year median P/S Ratio. This stock price testing suggests that the stock price is relatively cheap.
When I look at analysts’ recommendations I find Strong Buy (1), Buy (3), Hold (6) and Underperform (2). The consensus would be a Hold. The 2 month stock price consensus is $7.42. This implies a total return of 31.45% with 23.46% from capital gains and 7.99% from dividends based on a stock price of $6.01.
Bryan Cramer on Simply Wall Street talks about the dividend being sustainable at a negative 139% payout. In fact using a negative as the Dividend Payout Ratio makes no sense whatsoever. The DPR below 0 should just be noted as negative. Devon Dixon on Week Herald says that the company beat the estimates by $0.01 as expected loss was a loss $0.18 and the loss was only $0.17. Also a number of analysts increased their 12 month stock price. Karen Thomas on Motley Fool thinks that this company is worth the risks. See what analysts say about this stock on Stock Chase. They like the company but point out the risks.
Ensign Energy Services Inc. is an energy services company. The Company is engaged in providing oilfield services to the crude oil and natural gas industry in Canada, the United States and internationally. Its web site is here Ensign Energy Services.
The last stock I wrote about was about was Hardwoods Distribution Inc. (TSX-HDI, OTC-HDIUF)... learn more. The next stock I will write about will be Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR)... learn more on Wednesday, May 30, 2018 around 5 pm. Tomorrow on my other blog I will write about Ontario Election.... learn more on Tuesday, May 29, 2018 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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