I do not own this stock of Pulse Seismic Inc (TSX-PSD, OTC-PLSDF). I wanted to invest some extra money in a dividend paying small cap. I went to the Globe and Mail site of G&M and from Globe Investor section I selected the Stock Filter. I asked for companies that were priced between $1 and $5.50 and had a yield between 4% and 20%. Pulse Seismic Inc. was one of the companies that were returned. This is not a stock I chose to invest in but I found it of interest so I am following it.
When I was updating my spreadsheet, I noticed 2018 was not a good year for this company, but they have been doing better in 2019. For example, Revenue was down by 77% in 2019, but is up by 117% for the first two quarters of 2019. Revenue in in 2017 was 43M, for 2018 was 10M and for the 12 months ending in the second quarter of 2019 is 22M.
When I looked at it first, it was a dividend paying stock. However, dividends have gone up, down and been suspended. Currently dividends are suspended since 2016. The dividends were probably suspended as they could no longer afford them.
Debt Ratios have weakened considerably with the purchase of Seitel, but hopefully they will again improve. They had no debt from 2015 until this year. In 2019 they borrowed to buy Seitel Canada Ltd. The Long Term Debt/Market Cap Ratio is low at 0.26, currently. The current Liquidity Ratio at 0.79 is the lowest it has ever been. It has a 5 year median of 13.24, a very high value. If you add in cash flow the ratio becomes 1.72.
The current Debt Ratio is also the lowest it has ever been at just 1.84, compared to a 5 year median of 5.92. The Leverage and Debt/Equity Ratios are the highest they have ever been at 2.19 and 1.19 where the 5 year median is 1.43 and 0.43.
The Total Return per year is shown below for years of 5 to 20 to the end of 2018. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 0.00% | -18.52% | -20.83% | 2.31% |
| 2008 | 10 | 0.00% | 3.10% | -0.20% | 3.30% |
| 2003 | 15 | 0.00% | 5.38% | 0.00% | 5.38% |
| 1998 | 20 | 13.54% | 6.47% | 7.06% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative as is the 10 year ratios. The historical corresponding ratios are 3.43, 4.81 and 6.04. The current P/E Ratio is 12.16 based on a stock price of $2.31 and 2019 EPS estimate of $0.19. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $1.68. The 10 year low, median, and high median Price/Graham Price Ratios are 1.54, 1.91 and 2.32. The current P/GP Ratio is 1.38 based on a stock price of $2.31. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 3.31. The current P/B Ratio is 3.50 based on a Book Value of $35,238M, Book Value per Share of $0.66 and a stock price of $2.31. The current ratio is 6% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable, but above the median.
The dividend yield test cannot be done because the dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 4.45. Th current P/S Ratio is 4.97 based on 2019 Revenue estimate of $25M and a stock price of $2.31. The current ratio is 12% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable, but above the median.
Results of stock price testing is that the stock price is above the median. The problem with stock price testing is that values are going down. I look at my spreadsheet and I see lots of red ink. The drop off in Revenues for 2018 was not a normal fluctuation. Revenues went down 77%. This is why the P/S Ratio test is showing the stock price is relatively high. For the P/B Ratio test, the book value has dropped 10% per year over the past 5 years. This is why this test is showing the stock price as above the median.
Is it a good company at a reasonable price? Investing in this company is a bet that it will recover and their idea of making money by selling seismic data to the energy sector will be a profitable venture. The good news is that insiders are not selling and have marginally increased their shares. The Chairman owns just over 15% of the outstanding shares and also marginally increased his position last year. The bad news is that they are taking on debt with Revenue, Earnings, Cash Flow, and stock prices declining. The good news is that they appear to started to recover in 2019. It is hard to know if price is reasonable. It does seem on the high side of reasonable.
When I look at analysts’ recommendations, I find only one recommendation and that is a Buy. The consensus would therefore be a buy. The 12 month stock price consensus is $3.40. This implies a total return of 47.19% all from capital gains.
See what analysts are saying on Stock Chase. Not much reporting on the stock because it is thinly traded. Jeff Parent discusses Pulse Seismic on BNN. Ambrose O'Callaghan on Motley Fool talks about this stock in 2017. A writer on Simply Wall Street thinks the CEO is being paid more than for other companies at the same size. A writer on Simply Wall Street discusses this stock.
Pulse Seismic Inc is a Canadian company which acts as a provider of seismic data to the energy sector in western Canada. The company is engaged in the acquisition, marketing, and licensing of 2D and 3D seismic data to the energy sector. Its web site is here Pulse Seismic Inc.
The last stock I wrote about was about was Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more. The next stock I will write about will be TECSYS Inc (TSX-TCS, OTC-TCYSF) ... learn more on Wednesday, July 31, 2019 around 5 pm. Tomorrow on my other blog I will write about BRP Inc.... learn more on Tuesday, July 30, 2019 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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