Dain on MIND (one of the Dog's old faves):
MIND:B-Spec;A RETURN TO THE BLACK, MIND REPORTS 4Q01 EPS OF $0.04 VS.
CONSENSUS $0.01
Mitcham Industries, Inc. reported fiscal fourth-quarter operating EPS of
$0.04, matching our estimate while beating the $0.01 consensus estimate. An
improving short-term leasing business and increasing activity in Canada
resulted in significant sequential increases in revenue along all Mitcham
Industries' segments. Short-term leasing, Mitcham Industries' core segment,
increased sequential revenues by 82% ($4.6 million vs. $2.5 million), while
leasing under lease/purchase agreements rose to more than $1 million from
$200,000 in the third quarter. In the face of this large, sequential increase
in revenue, Mitcham Industries kept SG&A expenses static, demonstrating the
significant leverage Mitcham Industries has to increasing seismic activity.
For Mitcham Industries' fiscal 2001 year, Mitcham Industries' loss per share
decreased to $0.32 from its 2000 level of ($0.51), while nearly doubling
revenues ($20.6 million in 2001 vs. $10.6 million in 2000).
Going forward, we believe two of Mitcham Industries' recent moves improve
its immediate future. First, Mitcham Industries on Tuesday (April 17) settled
a class action shareholder lawsuit for $2.7 million, which will be paid by
the company and its insurance carrier--Mitcham Industries set aside, in the
fourth quarter, $1.1 million as a reserve to pay for the settlement. The
lawsuit was a dark cloud over the share price, therefore we view the
settlement as beneficial to shareholders going forward.
Secondly, Mitcham Industries' rapid expansion of equipment available to
lease (now more than $91 million worth in the inventory lease pool vs. just
$32 million one year ago) should begin to ease, allowing the new assets to
generate cash down to the bottom line.
Stock Opinion
Mitcham remains a top micro-cap play for appropriate value, retail, and
private accounts that should aggressively build a position in the stock as
financial improvements are at hand and should continue to strengthen
throughout 2001.
We are raising our price target to $7 from $6 to reflect improving outlook
for seismic equipment. Our price target is based on 17x our 2002 estimate of
$0.41. This is a significant discount to the seismic comp group to reflect
the limited liquidity and small market capitalization. However, our price
target is likely conservative, because it represents only a 20% premium to
the current book value per share.
Company Description
Mitcham Industries, Inc. is the leading independent company specializing in
the leasing of 3-D seismic equipment to the oil and gas industry. Mitcham
Industries also sells new and used seismic equipment. |
