Q: Is it trading at a low pe on 3 for a reason? Would it be a buy and if so low medium or high conviction?
5i Research Answer:
The sector valuation is very low, and SHLE remains cheap even after an 83% YTD gain. The balance sheet is more leveraged than most, and it is quite a small company, so those are two reasons. It pays no dividend, and frac sand is seen as more volatile of a commodity. Earnings have been highly cyclical, with some very big losses in some years (nearly $100M in 2020 but it was a covid year). This all holds back investors' willingness to pay up.