Sound bite for Twitter and StockTwits is: Industrial Service Stock. The stock is relatively cheap. It has great debt ratios. However, it does service the oil patch and therefore is risky. See my spreadsheet on Trican Well Service Ltd.
I do not own this stock of Trican Well Service Ltd (TSX-TCW, OTC-TOLWF). I was following Canyon Services Group Inc. and Trican Well Services Ltd. had a plan of arrangement with Canyon Shareholders.
When I was updating my spreadsheet, I noticed in 2018 and 2019 they reducing their Long Term Debt and Goodwill and Intangible assets. They also have very good debt ratios. Both these are very good things for the company to do.
The company used to have dividends. They were started in 2011 and cancelled in 2017. Analysts do to expect any future dividend payments in the near term. The 5 year coverage DPR for EPS for 2015 was 102%. The DPR for CFPS for 2015 was 98%. Clearly, they could not afford the dividends. At different times the company had earning losses and negative cash flow.
Debt Ratios are good. The long Term Debt/Market Cap Ratio for 2018 is low and therefore good at 0.13. It fell to 0.03 in the second quarter of 2019. Both the Liquidity Ratio and Debt Ratios are high and therefore good at 2.35 and 5.36 respectively. These high ratios will see a company through bad times. The Leverage and Debt/Equity Ratios are low and therefore good at 1.23 and 0.23 respectively for 2018.
The Total Return per year is shown below for years of 5 to 12 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.
Dividend Growth is zero because dividends have been suspended since 2016.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 0.00% | -27.94% | -30.10% | 2.15% |
| 2008 | 10 | 0.00% | 27.89% | 9.63% | 18.26% |
| 2005 | 12 | 0.00% | -1.57% | -7.25% | 5.68% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative 1.41, 3.64 and 5.88. The corresponding 10 year ratios are 0.58, 3.10 and 1.92. The corresponding historical ratios are also negative at 1.41, 3.64 and 5.88. The current P/E Ratio is also negative at 5.43 based on a stock price of $1.25 and 2019 EPS estimate of earnings losses of $0.23. What do I say? You cannot do this test when you got negative P/E Ratios.
I get a Graham Price of $1.09. This is not a good test when earnings are negative for a number of years as the Graham Price may not reflect the true Graham Price. The 10 year low, median, and high median Price/Graham Price Ratios are .61, 1.03 and 1.31. The current P/GP Ratio is 1.15 based on a stock price of $1.25. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.59. The current P/B Ratio is 0.47 based on a stock price of $1.25, Book Value of $794M and Book Value per Share of $2.64. The current ratio is some 70% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do a dividend yield test because dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 1.78. The current P/S Ratio is 0.51 based on a stock price of $1.25, Revenue estimate for 2019 of $741 and Revenue per Share of 2.46. The current ratio is 71% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. It is never a good sign when there are test you cannot do. In this case the P/E Ratio testing cannot be done when you have a lot of earnings losses and the dividend yield test cannot be done due to dividends being suspended. With the P/GP Ratio test, the Graham Price can be suspect because of earning losses. The important one is the P/S Ratio test and it is showing that the stock is cheap. Another good one is the P/B Ratio test and this is showing the same thing.
Is it a good company at a reasonable price? An oil patch services stock is risky because the oil patch is all boom and bust. The think that company has going for it is good debt ratios and this can see a company through some very rough times. Personally, I do not buy stocks that do not pay dividends, so currently, I would not buy this stock.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (10). The consensus would be a Buy. The 12 month stock price is $1.51. This implies a total return of 20.80% all from capital gains.
See what analysts are saying on Stock Chase. Some think this is turn-around stock and others that there is too much capacity in the Canadian Oil Patch for oil field services. Nelson Smith on Motley Fool says that the smart money is buying. A writer on Simply Wall Street says that the intrinsic value of this stock is $1.84 and above the current price.. A writer onSimply Wall Street said they would be happier if insiders owned more shares. Chelsea Overton on Sundance Herald said that National Bank lowered their target price for this stock recently.
Trican Well Service Ltd is a Canada-based oilfield services company. It provides products, equipment, services, and technology for use in the drilling, completion, stimulation, and reworking of oil and gas wells primarily through its continuing pressure pumping operations in Canada. Its web site is here Trican Well Service Ltd.
The last stock I wrote about was about was Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more. The next stock I will write about will be Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more on Friday, September 20, 2019 around 5 pm. Tomorrow on my other blog I will write about Barrick Gold.... learn more on Thursday, September 19, 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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