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Mackie Research has updated coverage on Strad Energy Services (TSX: SDY)

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Following the release of results for the 3 months ended June 30th, analyst Russell Stanley reiterated his buy recommendation, raising his 12-month price target from $3.50 to $4.00, a premium of 40% to the $2.86 price on August 7th, the day the report was issued.

Additional Information:

Company: Strad Energy Services
Website: http://www.stradenergy.com/
Stock Symbol: TSX: SDY
Date Published: Aug 12, 2015
Transcript: Available

Video Transcript:

I’m Samantha Deutscher for InvestmentPitch.com

Mackie Research has updated coverage on Strad Energy Services, symbol SDY on the Toronto Stock Exchange.

Following the release of results for the 3 months ended June 30th, analyst Russell Stanley reiterated his buy recommendation, raising his 12-month price target from $3.50 to $4.00, a premium of 40% to the $2.86 price on August 7th, the day the report was issued.

The company provides well-site equipment and services to the oil and gas industry from 28 operating locations in the Western Canadian Sedimentary Basin, as well as the Bakken and Marcellus shale basins in the United States.

While its primary business is equipment rentals, there are some products, such as some types of matting, that
customers prefer to buy rather than rent.

This segment generates revenue from sales of in-house manufactured products, 3rd party products, and equipment from the company’s own fleet.

Second quarter revenue of $29.9 million decreased 44% compared to $53.7 million for the same period in 2014, with adjusted EBITDA of $3.9 million down 69% compared to $12.3 million.

During the quarter, strong operating cash flow and working capital management allowed for repayment of $11.1 million in debt.

Andy Pernal, President and CEO, stated: “As we anticipated, the challenging market conditions facing the oil and gas industry in North America continued into the second quarter resulting in sharp year-over-year rig count declines. However, we continue to believe that our diversification strategy into energy infrastructure related opportunities and proactive cost management will position us well to respond when activity levels improve."

Analyst Russell Stanley stated: “Strad has continued to generate stronger-than-expected cash flow, despite the significant decline in energy services activity in both Canada and the United States. The current dividend yield of almost 10% is approximately 2x the average amongst Canadian-listed, dividend-paying energy service companies. With ample balance sheet flexibility, and continued cash flow generation in a tough environment, the company is well positioned to maintain that dividend and make targeted growth investments, where warranted.”

The company currently trades at $2.78, and with 37.3 million shares outstanding, the company is capitalized at $103.7 million.

For more information, please visit the company’s website www.stradenergy.com or contact Andy Pernal, President & CEO, at 403-775-9202 or email apernal@stradenergy.com.

For more information about Mackie Research or to obtain the report on Strad Energy Services contact your nearest Mackie Research office. Their branches are listed on their website at www.mackieresearch.com.

I’m Samantha Deutscher for InvestmentPitch.com
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This video is for information purposes only and it is not a recommendation to buy or sell any securities.