ENSV. I have shares in a couple of small service companies to the frac companies -- these stocks have been a disappointment to me. So I'm wary. ENSV write-up very positive; I'm not so sure of continuance of profit growth. As the industry's only national provider of frac water heating, hot oiling, well acidizing, and water-hauling services, Enservco stands uniquely positioned to service both the nearly 1.1 million existing oil and gas wells and the estimated 40,000-45,000 new wells drilled annually.
Two things: Okay, the only "national provider" --- what about local competition though? If ebitda margins are 30-40% ,why aren't companies like Haliburton entering the business? (otoh: Maybe they will, with a take-out of ENSV.)
At the beginning of July, management finalized its $16 million capital-expenditure plan for fiscal 2014. The plan will add 18 mega frac water heaters, 20 hot oiling units, and four acidizing units to the fleet, and management estimates that these additions will generate more than $35 million of incremental revenue.
If I assume profit margin of 7% (company margin as reported by Yahoo), then on $35M, $2.45M goes incremental profit to the bottom line. That's 6.6 cents per share. I'd guess that might might result in an overall p/e somewhere around 13-15x. That p/e range is where the bigger/safer(?) companies lie. Maybe the stock hits $3.75-$4 next year. (Stock $3.15 now.) So it might be a good buy.
I believe for me, I'll stay away for now. I don't really understand the prospects for ENSV's business, and I'm already a little gun-shy with buying small caps in the o&g service business, so this is - or may be - one of those stocks that moves up without me.
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