Q: With todays upgrade what do you think about this company as a viable growth company in todays energy sector? An evaluation would be much appreciated.
Thanx
Gary
Thanx
Gary
5i Research Answer:
We think it is a high risk growth company with nearly $800M in net debt at a market cap of $551M. The stock is extremely cheap at 2x forward earnings and it has recently made an acquisition which should help it continue to grow. Recent quarterly results were also strong reflecting this acquisition. The upgrade highlighted SOIL as a diversified entity, with a strong management team that should be able to optimze free cash flow generation. We think it is an risky purchase, at a small size in a volatile industry, but the potential for growth is there and it is extremely cheap.