Pason Systems Inc is a powerful growth stock
05.03.2015 • About Pason Systems Inc (
$PSI) • By InTwits
Pason Systems Inc is an attractive growth stock in Energy industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Pason Systems Inc showed fast growth in the last financial year. The company's revenue surged on 23.9% in FY2014. EBITDA also increased considerably: 45.1% for the same period.
In the longer period Pason Systems Inc showed fast revenue growth of 13.0% from 2011 to 2014 annually. EBITDA surged on 12.9% from 2011 to 2014 annually.
Pason Systems Inc ($PSI) financials for the last 5 years
| mln. CAD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 250 | 346 | 387 | 403 | 499 |
|---|
| Revenue growth, % | | 38.7% | 11.7% | 4.3% | 23.9% |
|---|
| Gross margin, % | 57.9% | 61.8% | 63.5% | 62.2% | 64.9% |
|---|
| SG&A, % | 3.39% | 6.17% | 5.15% | 4.62% | 3.76% |
|---|
| EBITDA | 102 | 174 | 179 | 172 | 250 |
|---|
| EBITDA growth, % | | 70.9% | 3.2% | -3.9% | 45.1% |
|---|
| EBITDA margin, % | 40.7% | 50.2% | 46.4% | 42.8% | 50.1% |
|---|
| Net Income | 36 | 86 | 40 | 24 | 112 |
|---|
| Net Income margin, % | 14.6% | 24.9% | 10.3% | 5.87% | 22.5% |
|---|
| |
| CAPEX | 45 | 71 | 59 | 56 | 114 |
|---|
| CAPEX/Revenue, % | 18.2% | 20.6% | 15.2% | 13.9% | 22.8% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 110 | 105 | 138 | 78 | 145 |
|---|
| Net Debt/EBITDA | -1.1x | -0.6x | -0.8x | -0.5x | -0.6x |
|---|
| |
| ROIC, % | 16.7% | 33.5% | 30.0% | 29.7% | 41.0% |
|---|
| ROE, % | 11.8% | 25.5% | 10.8% | 6.4% | 26.4% |
|---|
Profitability and return on investment
EBITDA growth was supported by margin expansion. The company showed fast EBITDA margin growth of 7.30 pp from 42.8% to 50.1% in 2014. In the last 3 years the company showed almost no change in EBITDA margin of 0.100 pp from 50.2% in 2011 to 50.1% in 2014.
We call Pason Systems Inc an attractive growth stock as together with the growth it delivers high ROIC at 41.0%. Three years ago it was lower at 33.5%. It's average level of ROIC for the last three years was 33.6%.
The company showed fast Net Income margin growth of 16.6 pp from 5.90% to 22.5% in 2014. If we look for the longer period Pason Systems Inc's Net Income margin decreased on 2.40 pp from 24.9% in 2011 to 22.5% in 2014.
Pason Systems Inc operates at ROE of 26.4%. Average ROE for the last three years was 14.6%.
Capital expenditures (CAPEX)
To fuel this fast growth Pason Systems Inc had to invest in CAPEX.In FY2014 Pason Systems Inc had CAPEX/Revenue of 22.8%. Pason Systems Inc showed fast CAPEX/Revenue growth of 2.15 pp from 20.6% in 2011 to 22.8% in 2014. It's average CAPEX/Revenue for the last three years was 17.3%.
Leverage (Debt)
Pason Systems Inc has negative net debt at -0.6x Net Debt/EBITDA - at the same time with high growth. In the longer period leverage surged on 0.03x from -0.60x in 2011 to -0.58x in 2014.
Valuation vs. comparable companies
The company trades at 5.7x EV/EBITDA which is 65% lower than 16.3x Energy industry avearge calculated based on 434 companies. The market closed today at 14.0x P/E for Pason Systems Inc which is 59.9% lower than 35.0x Energy peer group avearge calculated on the basis of 75 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Pason Systems Inc traded at 10.5x EV/(EBITDA-CAPEX) which is 49% lower than 20.5x Energy peer group avearge calculated on the basis of 48 companies.
Management team
Pason Systems Inc is headed by Marcel Kessler as a CEO and by Jon Faber as a CFO. Marcel Kessler tenure as a CEO is 3.2 years. Jon Faber's tenure is 0.8 years as a CFO.
Peers in Energy
Below we provide Pason Systems Inc benchmarking against other companies in Energy industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Bengal Energy Ltd ($BNG) | | 8.5% | 132.8% | 37.7% | 245.0% |
| MEG Energy Corp ($MEG) | | 41.9% | 1.3% | 27.0% | 112.1% |
| ARC Resources Ltd ($ARX) | | 19.4% | -2.1% | 17.4% | 71.7% |
| Calfrac Well Services Ltd ($CFW) | | 64.3% | 3.8% | -2.0% | 59.7% |
| Lynden Energy Corp ($LVL) | | 270.5% | 220.7% | 59.9% | 56.8% |
| |
|---|
| Median (41 companies) | | 32.7% | 2.9% | 12.6% | 14.2% |
|---|
| Pason Systems Inc ($PSI) | | 38.7% | 11.7% | 4.3% | 23.9% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| TransAlta Renewables Inc ($RNW) | | | | 94.4% | 94.5% |
| MEG Energy Corp ($MEG) | 78.8% | 85.5% | 86.8% | 87.4% | 87.6% |
| Birchcliff Energy Ltd ($BIR) | 71.9% | 73.6% | 70.1% | 73.5% | 78.4% |
| Lightstream Resources Ltd ($LTS) | | | 78.9% | 78.5% | 77.5% |
| Bonavista Energy Corp ($BNP) | 71.1% | 69.7% | 62.6% | 66.6% | 70.4% |
| |
|---|
| Median (38 companies) | 31.7% | 31.0% | 30.7% | 27.4% | 29.7% |
|---|
| Pason Systems Inc ($PSI) | 57.9% | 61.8% | 63.5% | 62.2% | 64.9% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Bonavista Energy Corp ($BNP) | 68.4% | 63.8% | 64.6% | 62.6% | 91.6% |
| Innergex Renewable Energy Inc ($INE) | 110.6% | 109.4% | 111.8% | 110.0% | 82.9% |
| Lynden Energy Corp ($LVL) | -20.2% | 49.5% | 64.5% | 75.1% | 77.5% |
| ARC Resources Ltd ($ARX) | 61.2% | 65.1% | 60.2% | 66.5% | 75.3% |
| Birchcliff Energy Ltd ($BIR) | 67.3% | 60.0% | 59.8% | 76.6% | 73.0% |
| |
|---|
| Median (41 companies) | 21.5% | 29.2% | 22.0% | 22.6% | 27.7% |
|---|
| Pason Systems Inc ($PSI) | 40.7% | 50.2% | 46.4% | 42.8% | 50.1% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Yoho Resources Inc ($YO) | 97.6% | 128.6% | 157.8% | 111.0% | 140.2% |
| TAG Oil Ltd ($TAO) | 49.5% | 163.6% | 107.9% | 173.2% | 138.1% |
| BlackPearl Resources Inc ($PXX) | 90.3% | 141.2% | 87.5% | 52.2% | 127.4% |
| Niko Resources Ltd ($NKO) | 74.7% | 4.6% | 58.5% | 102.2% | 118.9% |
| Lynden Energy Corp ($LVL) | 758.0% | 306.8% | 208.1% | 298.6% | 116.6% |
| |
|---|
| Median (41 companies) | 28.1% | 28.0% | 36.3% | 26.4% | 31.5% |
|---|
| Pason Systems Inc ($PSI) | 18.2% | 20.6% | 15.2% | 13.9% | 22.8% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| ARC Resources Ltd ($ARX) | 5.5% | 6.5% | 3.2% | 7.9% | 20.7% |
| Strad Energy Services Ltd ($SDY) | 9.6% | 19.5% | 9.5% | 6.1% | 17.6% |
| PHX Energy Services Corp ($PHX) | 12.2% | | | 19.8% | 17.2% |
| Lynden Energy Corp ($LVL) | -1.3% | 2.2% | 8.8% | 7.8% | 16.6% |
| Encana Corp ($ECA) | 6.4% | 2.8% | -29.9% | 7.5% | 15.5% |
| |
|---|
| Median (43 companies) | 6.6% | 6.5% | 4.1% | 5.2% | 6.1% |
|---|
| Pason Systems Inc ($PSI) | 16.7% | 33.5% | 30.0% | 29.7% | 41.0% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Lightstream Resources Ltd ($LTS) | | | 2.0x | | 27.8x |
| Pengrowth Energy Corp ($PGF) | 1.5x | 1.5x | 2.9x | 2.1x | 16.8x |
| Alterra Power Corp ($AXY) | | 59.3x | 21.2x | 18.2x | 11.5x |
| Innergex Renewable Energy Inc ($INE) | 3.9x | 6.7x | 6.4x | 6.4x | 8.3x |
| AltaGas Ltd ($ALA) | 3.7x | 7.4x | 10.9x | 8.9x | 7.8x |
| |
|---|
| Median (37 companies) | 1.4x | 1.2x | 1.7x | 2.0x | 1.7x |
|---|
| Pason Systems Inc ($PSI) | -1.1x | -0.6x | -0.8x | -0.5x | -0.6x |
