You may be right that a combination provides a better chance for success.
For me though, I neither do technical analysis (studying chart trends) nor in my view do I perform detailed fundamental analysis. To me, detailed fundamental analysis would be looking closely at a company's management, studying it's 10k's and annual and quarterly reports, perhaps researching the company's suppliers and customers. I don't do much of any of that. I mostly just look at the basic stuff -- roe, p/bk, p/e, p/sales, d/e, sales growth, profit margins, maybe insider buying.
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I looked again at how I would value ESA. Too tough for me. Too short company history, and an erratic earnings history.
As I view it, the company's organized itself to try to capture shale business. Shale oil/gas maybe still being in its early stages. As other service companies report earnings, ESA reports losses. Perhaps as ESA says: due to rains and contract delays. Backlog of business seems good. My point though is that other service businesses in the sector are reporting good profits on the boom in business they are seeing, so ESA should too in my view. Regardless.
Stock is now $3.18. For a swag, maybe when the sales backlog is being worked, the company can earn 15% on its book value of $3.80. Which is $.57, to which I'd assign a multiple of 7-8. So maybe fair value might be $4-$4.50. (just my view, of course) I've no idea though what the probability is that ESA could actually earn .57. Or earn anything. Their history of delivering earnings performance is just not good. |
