Looking for fundamental growth story? Pay attention to Canadian Energy Services & Technology Corp
19.03.2015 • About Canadian Energy Services & Technology Corp (
$CEU) • By InTwits
Pay attention to Canadian Energy Services & Technology Corp as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Canadian Energy Services & Technology Corp showed growth in the last financial year. Canadian Energy Services & Technology Corp's revenue surged on 46.8% in FY2014. At the same time the company well managed its profitability and showed even faster growth in EBITDA of 61.0% for the same period.
If we look for the longer period the company showed fast revenue growth of 28.4% from 2011 to 2014 annually. EBITDA surged on 28.5% from 2011 to 2014 annually.
Canadian Energy Services & Technology Corp ($CEU) financials for the last 5 years
| mln. CAD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 249 | 459 | 471 | 663 | 973 |
|---|
| Revenue growth, % | | 84.4% | 2.6% | 40.6% | 46.8% |
|---|
| Gross margin, % | 27.5% | 26.9% | 23.4% | 26.4% | 27.3% |
|---|
| SG&A, % | 14.4% | 12.8% | 13.3% | 15.7% | 15.3% |
|---|
| EBITDA | 39 | 74 | 59 | 98 | 158 |
|---|
| EBITDA growth, % | | 90.7% | -20.7% | 66.4% | 61.0% |
|---|
| EBITDA margin, % | 15.6% | 16.2% | 12.5% | 14.8% | 16.2% |
|---|
| Net Income | 34 | 42 | 28 | 37 | 68 |
|---|
| Net Income margin, % | 13.8% | 9.08% | 5.91% | 5.62% | 6.96% |
|---|
| |
| CAPEX | 11 | 16 | 18 | 41 | 60 |
|---|
| CAPEX/Revenue, % | 4.42% | 3.51% | 3.77% | 6.20% | 6.19% |
|---|
| Debt | 52 | 100 | 75 | 315 | 376 |
|---|
| Cash | 0 | 0 | 0 | 0 | 0 |
|---|
| Net Debt/EBITDA | 1.3x | 1.3x | 1.3x | 3.2x | 2.4x |
|---|
| |
| ROIC, % | 19.8% | 24.2% | 15.6% | 14.3% | 14.3% |
|---|
| ROE, % | 25.3% | 21.8% | 13.3% | 12.9% | 15.0% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. Canadian Energy Services & Technology Corp showed EBITDA margin growth of 1.40 pp from 14.8% to 16.2% in 2014. If we look for the longer period the company showed no change in EBITDA margin of 0 pp from 16.2% in 2011 to 16.2% in 2014.
We call Canadian Energy Services & Technology Corp an attractive growth stock as together with the growth it delivers high ROIC at 14.3%. During the last three years it dropped - it was 24.2% in FY2011. It's average ROIC for the last three years was 14.7%.
Net Income margin surged on 1.40 pp from 5.60% to 7% in 2014. In the last 3 years the company showed big decline in Net Income margin of 2.10 pp from 9.10% in 2011 to 7% in 2014.
Canadian Energy Services & Technology Corp operates at ROE of 15.0%. It's average level of ROE for the last three years was 13.8%.
Capital expenditures (CAPEX)
To this fast growth Canadian Energy Services & Technology Corp had to invest in CAPEX.Canadian Energy Services & Technology Corp's CAPEX/Revenue was 6.19% in FY2014. CAPEX/Revenue surged on 2.68 pp from 3.51% in 2011 to 6.19% in 2014. It's average CAPEX/Revenue for the last three years was 5.39%.
Leverage (Debt)
The company has medium debt level at 2.4x Net Debt/EBITDA to maintain high growth. If we look for the longer period leverage surged on 1.04x from 1.35x in 2011 to 2.38x in 2014.
Valuation vs. comparable companies
The market closed today at 9.7x EV/EBITDA for Canadian Energy Services & Technology Corp which is 40.5% lower than 16.3x Energy peer group avearge calculated on the basis of 434 companies. The company trades at 17.1x P/E which is 51.3% lower than 35.0x Energy industry avearge calculated based on 75 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Canadian Energy Services & Technology Corp traded at 15.7x EV/(EBITDA-CAPEX) which is 23.3% lower than 20.5x Energy peer group avearge calculated on the basis of 48 companies.
Management team
Thomas James Simons "Tom" is a CEO of Canadian Energy Services & Technology Corp. Thomas James Simons "Tom" has already spent 5.0 years as a CEO of the company. CFO's tenure is 5.0 years.
Peers in Energy
Below we provide Canadian Energy Services & Technology Corp 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 |
|---|
| Spartan Energy Corp ($SPE) | | -8.2% | 16.6% | 29.9% | 923.7% |
| Kelt Exploration Ltd ($KEL) | | | | | 361.8% |
| Seven Generations Energy Ltd ($VII) | | | | 115.7% | 340.2% |
| Bengal Energy Ltd ($BNG) | | 8.5% | 132.8% | 37.7% | 245.0% |
| BNK Petroleum Inc ($BKX) | | 36.3% | -15.2% | -49.9% | 131.0% |
| |
|---|
| Median (100 companies) | | 37.4% | 5.0% | 12.5% | 16.2% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | | 84.4% | 2.6% | 40.6% | 46.8% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| TransAlta Renewables Inc ($RNW) | | | | 94.4% | 94.5% |
| Freehold Royalties Ltd ($FRU) | 91.4% | 91.7% | 90.4% | 89.0% | 90.2% |
| MEG Energy Corp ($MEG) | 78.8% | 85.5% | 86.8% | 87.4% | 87.6% |
| Vermilion Energy Inc ($VET) | 75.0% | 80.8% | 80.4% | 81.4% | 79.1% |
| Birchcliff Energy Ltd ($BIR) | 71.9% | 73.6% | 70.1% | 73.5% | 78.4% |
| |
|---|
| Median (92 companies) | 32.8% | 34.3% | 30.7% | 30.8% | 31.2% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 27.5% | 26.9% | 23.4% | 26.4% | 27.3% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Seven Generations Energy Ltd ($VII) | | | 56.9% | 54.0% | 106.0% |
| Tourmaline Oil Corp ($TOU) | 64.3% | 67.4% | 67.9% | 80.0% | 97.6% |
| Bonavista Energy Corp ($BNP) | 68.4% | 63.8% | 64.6% | 62.6% | 91.6% |
| Bellatrix Exploration Ltd ($BXE) | 55.3% | 42.7% | 58.6% | 83.6% | 89.6% |
| Peyto Exploration & Development Corp ($PEY) | 79.2% | 83.6% | 86.1% | 83.2% | 86.3% |
| |
|---|
| Median (99 companies) | 28.7% | 29.8% | 29.3% | 37.0% | 32.6% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 15.6% | 16.2% | 12.5% | 14.8% | 16.2% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Athabasca Oil Corp ($ATH) | 106.6% | 176.2% | 2,426.4% | 596.6% | 504.7% |
| BNK Petroleum Inc ($BKX) | 180.3% | 139.2% | 195.8% | 789.1% | 316.6% |
| Tamarack Valley Energy Ltd ($TVE) | 171.5% | 269.9% | 117.1% | 95.8% | 297.6% |
| Paramount Resources Ltd ($POU) | 177.7% | 268.0% | 392.0% | 334.8% | 283.2% |
| Questerre Energy Corp ($QEC) | 376.2% | 243.9% | 242.1% | 232.0% | 241.7% |
| |
|---|
| Median (100 companies) | 42.3% | 40.9% | 45.8% | 39.9% | 45.3% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 4.4% | 3.5% | 3.8% | 6.2% | 6.2% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Pason Systems Inc ($PSI) | 16.7% | 33.5% | 30.0% | 29.7% | 41.0% |
| Raging River Exploration Inc ($RRX) | | | | | 29.1% |
| High Arctic Energy Services Inc ($HWO) | 34.8% | 27.0% | 31.4% | 26.3% | 24.9% |
| ARC Resources Ltd ($ARX) | 5.5% | 6.5% | 3.2% | 7.9% | 20.7% |
| Freehold Royalties Ltd ($FRU) | 16.0% | 20.6% | 17.1% | 20.2% | 18.8% |
| |
|---|
| Median (102 companies) | 6.0% | 6.5% | 4.3% | 6.1% | 6.3% |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 19.8% | 24.2% | 15.6% | 14.3% | 14.3% |
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 ($AXY) | | 59.3x | 21.2x | 18.2x | 11.5x |
| Paramount Resources Ltd ($POU) | | 9.2x | 14.6x | 23.9x | 8.9x |
| Pattern Energy Group Inc ($PEG) | 0.0x | 8.6x | 18.7x | 8.8x | 8.5x |
| |
|---|
| Median (88 companies) | 1.3x | 1.2x | 1.3x | 1.3x | 1.3x |
|---|
| Canadian Energy Services & Technology Corp ($CEU) | 1.3x | 1.3x | 1.3x | 3.2x | 2.4x |
