Is it a good company at a reasonable price? I will retain this stock for now. However, what should give anyone pause is the amount of debt it has. The company has said that it plans to buy down its debt. You should not invest in this company any money you cannot afford to lose. The price is certainly cheap.
I 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. I know I would be selling Ensign at a loss, but I also could buy Mullen cheaply. See report. In June 2020, Ensign was selling at $0.74. It was quite a low, so I bought some. I again bought more in May 2021 at $1.33.
When I was updating my spreadsheet, I noticed I originally bought this stock in 2012. Because it was in trouble, I sold at a loss in 2014. However, in 2020, it was very cheap, so I bought some of this stock. On this company, by total return from 2014 is a loss of 2.29% with a capital loss of 3.60% and dividends of 1.31%. Since I rebought the stock in 2020 and then again in 2021, my total return is 33.91% per year with all of it capital gains.
One thing I noticed is the executive officers and directors I follow have money invested in this company. For example, even at the low price now of $2.18 on June 2, the CEO had stocks worth over $3M, the CFO has stocks worth over $.5M, and the Chairman has stocks worth over $1.7M.
The following chart shows that there has been growth over the past 5 years, but not over the past 10 years.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 57.63% | 9.53% |
| 5 | FFO Growth | 134.44% | 18.58% |
| 5 | Net Income Growth | 121.59% | 17.25% |
| 5 | Cash Flow Growth | 136.75% | 18.81% |
| 5 | Dividend Growth | 0.00% | 0.00% |
| 5 | Stock Price Growth | -47.30% | -12.02% |
| 10 | Revenue Growth | -28.22% | -3.26% |
| 10 | FFO Growth | -35.47% | -4.29% |
| 10 | Net Income Growth | -96.26% | -28.01% |
| 10 | Cash Flow Growth | -39.12% | -4.84% |
| 10 | Dividend Growth | 0.00% | 0.00% |
| 10 | Stock Price Growth | -77.81% | -13.98% |
If you had invested in this company in December 2012, for $1,014.42 you would have bought 66 shares at $15.37 per share. In December 2022, after 10 years you would have received $226.38 in dividends. The stock would be worth $225.06. Your total return would have been $451.44.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $15.37 | $1,014.42 | 66 | 10 | $226.38 | $225.06 | $451.44 |
The dividends are currently suspended, so I cannot talk about dividend yields, growth, or Dividend Payout Ratios.
Some Debt Ratios are awful and the company has lots of debt. The Long Term Debt/Market Cap ratio is currently too high at 1.46. If I include their Credit Facility in this, as it can be rolled over, the ratio is 3.67. Part of the reason for the high ratio is falling stock price, but also debt has risen. Debt grow om 2018 by 456%. Any ratio over 1.00 is too high, but a lot of analysts think that this ratio over 0.50 is too high. The ratio of 2022 was 0.89.
The Liquidity Ratio is too low at 0.40 in 2022 at 0.40. If this is below 1.00, it means that current assets cannot cover current liabilities. If I add in Cash Flow, the ratio is only 0.67. Only if I add back in the current portion of the long term debt, this ratio is over 1.50 (a reasonable ratio), at 1.61. The Debt Ratio is good at 1.68. The Leverage and Debt/Equity Ratios are fine at 2.47 and 1.47.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term | 0.89 | 1.46 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.40 | 0.40 |
| Liq. + CF | 0.67 | 0.73 |
| Liq, CF,DB | 1.61 | 1.58 |
| Debt Ratio | 1.68 | 1.70 |
| Leverage | 2.47 | 2.43 |
| D/E Ratio | 1.47 | 1.43 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.00% | -8.17% | -12.02% | 3.85% |
| 2012 | 10 | 0.00% | -10.10% | -13.98% | 3.88% |
| 2007 | 15 | 0.00% | -5.11% | -9.50% | 4.39% |
| 2002 | 20 | 0.00% | 1.13% | -4.37% | 5.49% |
| 1997 | 25 | 0.00% | 3.27% | -2.08% | 5.36% |
| 1992 | 30 | 0.00% | 23.93% | 9.22% | 14.70% |
| 1991 | 31 | 0.00% | 25.46% | 10.23% | 15.24% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are all negative and so useless. The corresponding 10 year ratios are also all negative and useless. The corresponding historical ratios are 8.53, 12.27 and 16.43. The current P/E Ratio is 6.97 based on a stock price of $2.09 and EPS estimate for 2023 of $0.30. This ratio is a low one and it is lower than the low ratio of this historical median ratio. This stock price testing suggests that the stock price is relatively cheap.
I have Funds from Operation (FFO) data. The 5-year low, median, and high median Price/FFO Ratios are all 0.86, 1.56 and 2.36. The corresponding 10 year median ratios are 2.99, 4.20 and 5.42. The current P/FFO Ratio is 0.92. This ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $18.96. The 10-year low, median, and high median Price/Graham Price Ratios are 0.24, 0.35 and 0.46. The current P/GP Ratio is 0.11 based on a stock price of $2.09. This ratio is below the low ratio of the 10 year median ratio. 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 0.58. The current P/B Ratio is 0.30 based on a Book Value of $1,292M, Book Value per Share of $7.04 and a stock price of $2.09. The current ratio is 49% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2023 of $7.26. This implies a P/B Ratio of 0.29, Book Value of $1,332M with a stock price of $2.09. This ratio is ratio is 50% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 4.02. The current P/CF Ratio is 1.04 based on a stock price of $2.09, Cash Flow per Share estimate for 2023 of $2.01 and a stock price of $2.09. The current ratio is 74% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do any dividend yield testing because dividends have been suspended.
The 10-year median Price/Sales (Revenue) Ratio is 0.85. The current P/S Ratio is 0.20 based on Revenue estimate for 2023 of $1,898M, Revenue per Share of $10.35 and a stock price of $2.09. The current ratio is 76% 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. The P/S Ratio test says this as does the rest of the stock price testing.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $4.67. This implies a total return of 123.44% all from capital gains.
There seems to be one analyst on Stock Chase following this stock and he has named it as his top pick for the last two years. Stock Chase gives this stock 1 star out of 5. Christopher Liew on Motley Fool says it is a favourite stock for March 2023 and he expects it will take off. Amy Legate-Wolfe on Motley Fool. The company put out a press release on Newswire about their 2022 results. The company put out a press release on Newswire about their results for the first quarter of 2023.
Simply Wall Street on Yahoo Finance thinks there is a current opportunity in investing in this stock. Simply Wall Street gives out 1 warning on this company of Interest payments are not well covered by earnings. Simply Wall Street gives this stock 2 and one half stars out of 5.
Ensign Energy Services Inc provides oilfield services to the crude oil and natural gas industries in Canada, the United States, and internationally. Geographically the company operates in nine countries; Canada, the United States, Argentina, Australia, Bahrain, Kuwait, Oman, United Arab Emirates, and Venezuela. Its web site is here Ensign Energy Services.
The last stock I wrote about was about was Adentra Inc (TSX-ADEN, OTC- HDIUF) ... learn more. The next stock I will write about will be Algonquin Power & Utilities Corp (TSX-AQN, NTSE-AQN) ... learn more on Monday, June 12, 2023 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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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