#Energy, #Infrastructure
Stock News: Enterprise Group (TSX: $E.TO) Good Things Can Happen to Great
Stocks
Do you invest in resource, industrial or technology
stocks? Here’s one that is all those and has set itself up for major growth
ST.
ALBERT, Alberta - May 3, 2018 (Investorideas.com Newswire) When the Canadian
resource decline made the sector analogous to the St. Valentine’s Day Massacre, Enterprise Group’s (TSX:E) eps dropped from $0.24 a share FY2013
to ($0.40) FY2015. Revenues peaked at $80 million FY2014 and were cut in half
the following year. The shares hit $3.50 mid 2014.
Read this news in
full at http://www.investorideas.com/CO/TSXE/news/2018/05031GoodThings.asp
The
Company posted eps of $0.01 and $0.02 for Q3 and Q4 2017 respectively. FY2017
revenues of $38 million versus FY2016 of $29 million The shares are trading at
$0.55.
Book
value is $1.01.
And Enterprise is net debt free.
Enterprise
Group is a consolidator of services to the energy sector; focused primarily on
specialized resource and infrastructure equipment rental.
See Where This is Going?
Not sure
why investors aren't all over Enterprise. A costly opportunity loss at least,
as the shares have a 2018 YTD high/low of $0.62/$0.28. And a book value of
$1.00. A stand up double so far.
I'll put
some metrics at the end of the piece, but the drivers that will bring E into
the investors' headlights are the recently announced proprietary asset
management software STARCHAIN. Second
is the cash position earmarked for potential acquisitions.
The
Company has a solid track record of acquiring companies, racking up major
revenues and then sell them for more than they paid.
STARCHAIN
The
purpose of StarChain is to monitor location, usage and address repair issues in
real time to maximize revenues and lessen equipment downtime from extensive
pool of rental assets. If a piece of equipment fails or experiences a
mechanical deficiency on a remote
project
site, StarChain independently alerts Enterprise and the fleet manager acts
immediately so that a replacement can be deployed, asset brought back online;
minimizing downtime, which in turn increases revenues, efficiency and asset
life.
The
Company sees this technology accomplishment as the baseline for future
developments within 'Industry 4.0': The current industrial transformation
caused by automation, data exchanges, Big Data, A.I. and IoT," stated Des
O'Kell SVP of Enterprise. "Enterprise has no plans to sell or license what
it sees as an incredible competitive advantage. The technology will be extended
to the operations of future acquisitions; this will allow for the significant
growth, in size and geographical reach."
STARCHAIN
software is the evolution of several technologies. The hardware is similar to
the Raspberry Pi. Evan at this stage, the custom module not only does exactly
the tasks it was designed for, but negates the need for GPS, which represents a
substantial monthly savings.
Financial results of the software are
measurable and impressive:
·
Proprietary
platform for future development and refinement
·
Task
and monitoring capabilities saves two significant salaries
·
Allows
management to plan to deploy company-wide through 3 subs
·
Plans
to generate a significant annual cost savings
·
Also,
to produce margin improvement
·
Represents
(one of) the Company's fundamental value propositions
·
No
plans to license; remains a corporate asset.
·
Not
aware of any competitive software
Take a Break
Before
we discuss acquisitions, let's look at the stock charts: Left is the 2013-2018
historical and the long period of consolidation that ensued.
These
data points would all be pretty meaningless if E management hadn't taken the
decision early not to be cowed into inaction. That decision was the right one
as the 2018 YTD chart right shows not only that the malaise has lifted, but
that E's initiatives are bearing fruit.
Management
is informing investors of their aggressive plans for the future, which will
include some impressive and accretive acquisitions.
Acquisitions Trail
As a
result of the recent $20.6 million sale of subsidiary Calgary Tunnelling &
Horizontal Augering (CTHA), Enterprise has no debt, a clean $25 million line of
credit and a further $15 million for acquisitions. No reason to think that the
future ones won't mirror E's two past endeavours:
As a
result of the recent $20.6 million sale of subsidiary Calgary Tunnelling &
Horizontal Augering (CTHA), Enterprise has no debt, a clean $25 million line of
credit and a further $15 million for acquisitions. No reason to think that the
future ones won't mirror E's two past endeavours:
1.
CTHA
was purchased in 2013 for $12 million. It generated $60 million in revenue
under E's stewardship and was then sold for $20.6 million as noted.
2.
TC
Backhoe was purchased in 2007 for $12 million. Revenues generated until sale;
$154 million. TCB was sold in June 2016 for $20 million
Management
owns 21 percent of the outstanding shares and acquired stock all through the
previous downturn.
The
Company is also in the midst of a roughly 5% share buyback announced in June
2017.
From 2016 Q3 discussion:
... The Company is committed to
certain service standards for its existing clients, which management believes
to be critical for fostering the Company's longer-term growth. As the Company
better understands the economic outlook for 2017 and the likely level of demand
for its services, it will adjust its internal infrastructure accordingly.
And it
did. And it has, and it will. As management owns over one fifth of the shares,
you can be sure shareholders are in extremely motivated and competent hands.
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Disclosure
this news article is a paid for news release on the Investorideas.com newswire
by Enterprise Group, Inc. (TSX: E) and was not created or originated by
Investorideas. Learn more about costs and our
newswire service http://www.investorideas.com/News-Upload/
Enterprise
Group, Inc. (TSX: E) is a previous featured monthly company on Investorideas
expiring on May 1 2018 .More info http://www.investorideas.com/About/News/Clientspecifics.asp
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