Sound bite for Twitter and StockTwits is: Cheap Industrial Stock. The stock price is cheap. There is insider buying by Chair, CEO and CFO. They do have good cash flow, but debt is high. See my spreadsheet on Ensign Energy Services.
I used to own this stock of Ensign Energy Services (TSX-ESI, OTC-ESVIF) prior to yesterday. 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.
When I was updating my spreadsheet, I noticed there is both insider buying and institutional buying. There is insider buying by CEO CFO and Chairman.
The dividend yields were recently high with dividend growth non-existent. Recently the dividend yields were over 16% before the company suspended their dividends. There has been no growth in dividends since 2015. Dividends have been suspended this year.
The Dividend Payout Ratios (DPR) have been unaffordable for EPS but not bad in connection with CF or FCF. As far as EPS goes, the company could not afford paying dividends since 2014. The DPR for CFPS for 2019 was 22% with 5 year coverage at 35%. The DPR for Free Cash Flow for 2019 was 40% with 5 year coverage at 55%.
Debt Ratios are mostly fine. The Long Term Debt/Market Cap Ratio was over 1.00 in 2018 and up to 3.41 in 2019 and currently is at 14.03. When a stock price crashes you get this problem. The Liquidity Ratios have mostly been low and to get a decent ratio you needed to add in cash flow after dividends. However, the current ratio is good at 1.53, but the 5 year median is just 0.96. If you had in cash flow after dividend, it is 2.00 with a 5 year ratio of 1.21.
The Debt Ratio has been good with the one for 2019 at 1.73 and the 5 year median at 2.33. The Leverage and Debt/Equity Ratios were good until 2018, and then were higher but still fine in 2019. These ratios were 2.37 and 1.37 in 2019 with 5 year medians of 1.75 and 0.75.
The Total Return per year is shown below for years of 5 to 28 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.42% | -14.55% | -22.51% | 7.96% |
| 2009 | 10 | 3.43% | -8.79% | -15.30% | 6.51% |
| 2004 | 15 | 8.31% | -3.15% | -9.41% | 6.26% |
| 1999 | 20 | 9.58% | 3.55% | -3.31% | 6.87% |
| 1994 | 25 | 15.03% | 15.71% | 5.03% | 10.68% |
| 1989 | 30 | 25.57% | 10.67% | 14.90% |
The Total Return per year is shown below for years of 5 to 28 to the current date. It is surprising that it is not that much more awful in total return to the current date considering, the stock has tanked.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.42% | -24.20% | -37.22% | 13.02% |
| 2009 | 10 | 3.43% | -15.33% | -26.20% | 10.87% |
| 2004 | 15 | 8.31% | -11.80% | -20.73% | 8.93% |
| 1999 | 20 | 9.58% | -1.83% | -11.98% | 10.15% |
| 1994 | 25 | 15.03% | 13.13% | -1.91% | 15.04% |
| 1989 | 30 | 25.34% | 5.18% | 20.16% |
Results of stock price testing is that the stock price is probably cheap. Most of the testing points to that. The P/S Ratio is a good test and it points to the stock being relatively cheap. The P/B Ratio and the P/CF Ratio tests are good ones and they point to the stock as being relatively cheap. The P/GP Ratio also points to this, but I am using my best guess for a Graham Price, so this test can be questioned.
Is it a good company at a reasonable price? Probably not and buying this company at this point would be highly speculative. However, the price is cheap and I am betting that the company will not only survive, but come back as a viable company that will again pay dividends. Time will tell.
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative so cannot be used. The corresponding 10 year ratios are 9.20, 11.55 and 13.90. The corresponding historical ratios are 8.59, 12.36 and 16.62. The current P/E Ratio is negative, so this test cannot be done.
My best estimate for the Graham Price is $8.79. The 10 year low, median, and high median Price/Graham Price Ratios are 0.62, 0.78 and 0.97. The current P/GP Ratio is 0.08 based on a stock price of $0.72. This stock price testing suggests that the stock price is relatively reasonable cheap.
I get a 10 year median Price/Book Value per Share Ratio of 0.87. The current P/B Ratio is 0.08 based on a Book Value of $1,509M, Book Value per Share of $9.27 and a stock price of $0.72. The current ratio is 91% below the stock price. This stock price testing suggests that the stock price is relatively reasonable
I get a 10 year median Price/Cash Flow per Share Ratio of 5.91. The current P/CF Ratio is 1.11 based on Cash Flow per Share estimate for 2020 of $0.65, Cash Flow of $106M and a stock price of $0.72. The current ratio is 81% below the 10 year median ratio. Results of stock price testing is that the stock price is?
I cannot do an historical median or 10 year median dividend yield test since the company has suspended their dividends.
The 10 year median Price/Sales (Revenue) Ratio is 1.15. The current P/S Ratio is 0.11 based on 2020 Revenue estimate of $1,022M, Revenue per share of $6.28 and a stock price of $0.72. The current ratio is 90% below the 10 year median ratio. Results of stock price testing is that the stock price is?
When I look at analysts’ recommendations, I find Buy (1), Hold (8), Underperform (2) and Sell (1). The consensus would be a Hold. The 12 month stock price consensus is $0.71. This implies a total loss of 1.4% all from a capital loss.
There is one recent entry on Stock Chase and it is rather positive. Joey Frenette on Motley Fool thinks this stock is one to take a few nibbles on. A writer on Simply Wall Street talks about insider buying at this company. A writer on Simply Wall Street is uneasy about the debt level of this company. Dan Healing on Global News talks about the company’s first quarter of 2020. Bob Geddes, CEO on a call to discuss first-quarter results said he never imaged such problems as we are now having, but “Nonetheless, it is reality, we adjust and we figure it out.”
Ensign Energy Services Inc is a Canada-based oil services company. It offers services in drilling and well servicing, oil sands coring, directional drilling, underbalanced and managed pressure drilling, equipment rentals, transportation, wireline services, and production testing services. 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 Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR) .... learn more on Friday, June 8, 2020 around 5 pm. Tomorrow on my other blog I will write about Something to Buy June 2020.... learn more on Thursday June 07 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.
No comments:
Post a Comment