| Pick-of-the-Month Stock-2 (January 2006) | ||||||
|---|---|---|---|---|---|---|
| Stock Name | SYM | Exch. | Sector | Industry | Date Picked | Pick Price (per share) |
| Mitcham Industries Inc. | MIND | NASD | Services | Rental & Leasing | 01/13/06 | $20.72 |
Mitcham Industries Inc. specializes in
the short-term leasing of seismic equipment to the
oil and gas industry. Seismic technology provides accurate data for identifying
oil and gas deposits, making it an
invaluable tool for exploration companies striving to increase productivity and
reduce exploration costs. The cost of acquiring the state-of-the-art seismic equipment can
run as high as $4.5 million.
Mitcham solves the
high cost of seismic equipment acquisition for exploration companies by leasing
the equipment and offering maintenance and support to companies on a short-term
basis. The Company has
sales and services offices in Calgary, Canada, Brisbane,
Australia, Singapore and the United Kingdom; and with associates throughout
Europe, South America and Asia, Mitcham is among the largest independent
exploration equipment lessor in the industry.
For the nine months ended 31 October 2005,
Mitcham's revenues increased
26% to $24.5M. Net income from continuing operations totaled $6.2M, up from
$622K.
Mitcham had a 3-month price growth
rate of 115.4% (vs. the Industry's 19.3% rate), a 6-month rate of 139.5% (vs.
the Industry's 28.9% rate), and a 12-month rate of 246.3% (vs. the
Industry's 81.6% rate). The Company
was founded in 1987 and has its corporate offices
in Huntsville, Texas. Number of employees: 68.
Sector: Service; Industry: Rental & Leasing; Ticker: MIND; Exch: NSDQ; 01/13/06 Price: $20.72)
STOCK GRADE (ASG: 48.07)
BUSINESS & FINANCIAL SUMMARY
(Yahoo)
EXPANDED BUSINESS DESCRIPTION
(Reuters)
STOCK INFO/RESEARCH
(MSN)
OWNERSHIP
(MSN)
KEY DEVELOPMENTS &
RECENT NEWS
(MSN)
HISTORICAL PRICES (Yahoo)
COMPANY'S WEB SITE STOCK'S CORE
STRENGTHS (SEE: Table Below) | Management's Effectiveness (12 Mo.) | . . . | Return on Equity: | 21.07% |
| Profitability (12 Mo.) | . . . | Profit Margin: | 24.32% |
| Stock's Growth Record (12 Mo.) | . . . | Revenue: | 17.68% |
| . . . | EPS: | 154.05% | |
| . . . | Price: | 207.42% | |
| . . . | Dividend: | NA | |
| PE & EPS (12 Mo.) | . . . | Price/Earnings: | 26.50 |
| . . . | Earnings/Share: | 0.78 | |
| Price / Share | . . . | As of 01/13/2006: | $20.72 |
MITCHAM COMPANIES, INC. - EVALUATION
MITCHAM's
stock emerged as an ACE'S selection based on the evaluation results of the
criteria listed below. The evaluation results are encapsulated as one value in
ASG (short for ACE'S Stock Grade). ASG
is proprietary variable that was devised by ACE'S to measure the
quality of a stock for investment.
MITCHAM's ASG value of 48.07 is GOOD.
A. MANAGEMENTS EFFECTIVENESS - EXCELLENT
B. PRODUCTS & SERVICES, SET OF -
GOOD
C. SALES -
AVERAGE
D. CASH FLOW, FREE -
AVERAGE
E. PROFITABILITY - BELOW AVERAGE
F. PRICE-EARNINGS RATIO (P/E) - EXCELLENT
(COMPARABLE TO INDUSTRY'S AVERAGE)
G.
FINANCIAL HEALTH -
EXCELLENT.
H.
MARKET CAPITALIZATION -
EXCELLENT
I.
TRADED VOLUME -
GOOD
J.
PRICE GROWTH - EXCELLENT
A. MANAGEMENTS EFFECTIVENESS - EXCELLENT
How well a company performs
generally - in its
business operations, controlling costs, the success of its products and
services in the market place, profitability, and the like - depends on its
management's efficiency. Return on Equity (ROE) is used as a general indication
of the company's efficiency.
MITCHAM's ROE (ttm) of 18.5% is higher (by about 10.7% and 2.7% points correspondingly) than the Industry's ROE of
7.8% and the S&P 500's ROE of 15.8%.
(Ref.:
MSN Finance\Key Ratios).
ACE'S gives a preferential rating to a company that has a
comparable or relatively higher ROE than the Industry. ACE'S rating of
MITCHAM's Management's Effectiveness: EXCELLENT.
^ Back to Evaluation
B. PRODUCTS & SERVICES, SET OF -
GOOD
Products and services are the elements that enables a company to have a presence
in its target market and generate sales. The set of products and services that a company has and how successful those products and services performs in the
target market are very important factors in considering a company's stock for
investment.
MITCHAM's line-up of Products & Services.
Land systems; marine and transition; cable and sensors; land energy sources,
engineering and environmental items; peripherals; vehicles; and miscellaneous
supplies.
MITCHAM's land systems are seismic data acquisition processors and recorders. The products in this group are composed of the following: telemetry systems (cable, RF and testing equipments), radio systems, CDP systems, and refraction systems. The products are provided by Sercel, Input/Output (I/O) and GEO-X Systems of Canada.
MITCHAM's marine & transition products are composed of the following:
Streamers, buoys,
marine energy
source
controllers.
MITCHAM's cable & sensor products are composed of the following:
Hydrophones, geophones, marsh phones, and telemetry cables.
LAND ENERGY SOURCES
MITCHAM's land energy source products are composed of the following: Vibrators & Drills, shooting systems, and vibrator electronics.
PERIPHERALS
MITCHAM's peripherals are composed of the following:
Tape transports, plotters, heli bags, test equipment, and cameras.
ENGINEERING &
ENVIRONMENTAL
MITCHAM's engineering & environmental products
are composed of the following: GPR (Ground Penetrating
Radar and accessories), refraction systems, and geophones.
VEHICLES
MITCHAM's vehicular products are composed of the following:
Trucks, recording cabs, and boats.
MISCELLANEOUS
SUPPLIES
MITCHAM's miscelaneous supplies are composed of the following:
Molding & splicing items, recording tapes, and
flagging items.
.
ACE'S
gives a preferential rating to a company who have
more than one product
and services that have present and continued utility in a broad and
dynamic market.
An estimation of the latter products' utility, distinctive qualities and competitiveness would be subjective assessments.
However, there is one objective data that indicates how well the subjective
elements of MITCHAM's products and services
are assessed and used by its target market - the company's
sales.
ACE'S rating of
MITCHAM's line-up of Products & Services: GOOD
^ Back to Evaluation
C. SALES - AVERAGE
Sales is an important indicator on how a company's products and services
performs in its target market. Generally, a high sales figure is preferred than a lower figure.
Also, a steady and appreciable growth in a company's total sales from one year to the next is a key indicator on how a
company is able (or unable) to sustain and improve the utility of its products and services in the marketplace.
MITCHAM's annual sales was $20.6M in 1/2001, $27.2M in 1/2002, $19.2M in 1/2003,
$22.4M in 1/2004 and $26.4M in 1/2005.
(Ref.:
MSN Money\Financials).
MITCHAM's ttm annual sales of $31.5M was 95.9% less than the Industry's
sales of $769.8M.
MITCHAM's ttm Sales growth rate of 26.50% was 9.60% points lower than the
Industry's rate of 36.10%.
(Ref.:
MSN Money\Research).
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a high and progressively increasing level of sales from year-to-year. MITCHAM's
year-to-year annual sales - from 2001 to 2005 - was maintained in the $19.2M to
$27.2M range. In terms of sales
volume, the Companies past 12 month sales is 95.90% less than the Industry.
In terms of growth rate,
MITCHAM's rate trails the Industry by 9.60% points. ACE'S rating of
MITCHAM's Sales Growth Rate: AVERAGE.
^ Back to Evaluation
D. CASH FLOW, FREE -
AVERAGE
Cash flow is crucial to the operation and survival of companies. A company
having ample ready cash ensures that creditors, employees, and others can be
paid on time.
Cash flow could be considered as a better measure of a business's profitability
than earnings, because a company can show positive net earnings and have insufficient cash flow (that is, the company
is not able to pay its debts). Cash Flow
thus can be used as an indicator of a company's financial strength.
MITCHAM's cash flow during the past 5 years: $13.3M in 1/2001;
$12.3M in 1/2002; -$1.8M in 1/2003; $4.5M in 1/2004; and $17.0M in
1/2005.
(Ref.:
MSN Money\Financials).
ACE'S
gives a preferential rating to a company that have demonstrated the ability to
sustain a positive and appreciable cash flow from year-to-year. MITCHAM's
year-to-year cash flow - from 2001 to 2005 - declined to -$1.8M in 2003; and
rebounded from the latter low point to the 5-year high of $17.0M level in 2005. ACE'S rating of
MITCHAM's Cash Flow: AVERAGE.
^ Back to Evaluation
E. PROFITABILITY - BELOW AVERAGE
Making a profit is the ultimate goal of every company. A useful gauge of a
company's profitability is its net income (also referred to as "earnings"). Related to a company's outstanding shares of common stocks, the company's total earnings is transformed
to "earnings per share" (or "EPS" for short). EPS is a very popular indicator of a company's profitability and a
powerful variable that influences the price of a company's stock.
MITCHAM's annual Net Income, for the past 12 months, of $7.7M is 22.3% of the
Industry's Income of $34.5M). For the past 5 years, MITCHAM's annual Net Income are:
-$2.9M
in 1/2001; -$8.5M in 1/2002; -$10.1M in 1/2003; -$6.3M in 1/2004; and $2.1M in
1/2005. In terms of growth, MITCHAM's Net Income have grown 787.6%
during the past 12 months (vs. the Industry's 95.40% growth rate).
(Refs.
MSN Money\Financials\Statements;
MSN Money\Wizard)
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a positive, appreciable and increasing net income..MITCHAM's
year-to-year annual Net Income - from 2001 to 2004 -were negative, ranging from
-$10.1M to -$2.9M. In 2005, the Company's net income
rebounded to the plus side ($2.1M). In terms of
income growth rate,
MITCHAM's rate surpasses the Industry by 692.2% points. ACE'S rating of
MITCHAMs Profitability: BELOW AVERAGE.
F. PRICE-EARNINGS RATIO (P/E) - EXCELLENT
(COMPARABLE TO INDUSTRY'S AVERAGE)
A stock's Price-Earnings ratio tells us roughly how much investors are willing
to pay per dollar of earnings. Price-Earnings
is a ratio of a company's current share price compared to its per-share
earnings. The P/E ratio is a much better indicator
of the value of a stock than the market price alone.
In general, a high P/E means high projected earnings in the future. As such, the
P/E ratio could be interpreted as the reflection of the market's optimism concerning a firm's growth prospects. To
determine whether a particular P/E is high
or low, take into account a company's growth rates; and the P/Es of other
companies in the same industry. Historically,
the average P/E ratio in the market has been around 15-25.
MITCHAM has a P/E ratio of 26.50 (ttm) which is 0.61
higher
than the
Industry's P/E of 25.89 (ttm)
(Ref.: Yahoo! Finance\Competitors)
ACE'S gives a preferential rating to a company that has a
comparable or relatively lower P/E than the Industry. ACE'S rating of
MITCHAM's P/E Ratio: EXCELLENT (COMPARABLE TO INDUSTRY'S AVERAGE)
^ Back to Evaluation
G. FINANCIAL HEALTH -
EXCELLENT
The assumption of debt, i.e., financial leverage, are used by companies to
finance its assets. The magnitude of the debt's expense component affects the company's net income.
A company with significantly more debt than equity is considered to be highly
leveraged. A popular measure of financial
leverage is the "debt/equity ratio". A higher debt/equity
ratio generally means that a company has been aggressive in financing its growth
with debt. This higher ratio can result
in volatile or negative earnings as a result of the additional interest expense.
Thus, the Debt/Equity Ratio is popularly used
as a measure of a company's financial health.
MITCHAM's has a 0.07 Debt/Equity Ratio (latest 12 months). Compared with the Industry's
0.26 and the S&P 500's 1.07, MITCHAM has an excellent debt ratio.
ACE'S gives a preferential rating to a company that has a
comparable or relatively lower debt ratio than the Industry. ACE'S rating of
MITCHAM's
Debt Ratio: EXCELLENT.^ Back to Evaluation
H. MARKET CAPITALIZATION - EXCELLENT
Market Capitalization (or market cap for short) is a measure of a company's
size. The market cap provides a broad gauge
of the growth-versus-risk potential of a company. Historically, large caps have
experienced slower growth with lower
risk; whereas small caps have experienced higher growth potential, but with
higher risk.
The market cap of a company is calculated by multiplying the number of its
outstanding shares by the shares' current market price. There are presently six classes of Market Cap: Mega Cap, Big/Large
Cap, Mid Cap, Small Cap, Micro Cap and Nano Cap.
MITCHAM is a small cap growth company with a market
capitalization of $210.92M and with outstanding shares of 9.26M.
ACE'S gives a preferential rating to small and mid cap companies. ACE'S rating of
MITCHAM's
Market Cap: EXCELLENT.
^ Back to Evaluation
I. TRADED VOLUME -
GOOD
A stock's price goes up or down based on the laws of supply and demand. Simply
stated, when a stock's price goes up, there must be significant buying demand
for the stock. Volume is the actual number of shares traded daily. Traded volume
could be used as a gauge of the demand for a stock.
MITCHAM has an 3-month Average Daily Volume of 226,476 shares; and
a 10-day Average Daily Volume of 452,800 shares.
(Refs.:
Yahoo! Finance\Statistics)
ACE'S gives a preferential rating to a company that sustains a
lively trade volume from week-to-week and month-to-month. ACE'S rating of
MITCHAM's Traded
Volume: GOOD.
J. PRICE GROWTH - EXCELLENT
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by the reader(s) of this site and/or buyer(s) of ACE'S stock picks. ACE'S is
not providing investment advice. ACE'S is providing equity research
information. ACE'S do not make any claims, promises or guarantees
that the information contained in this site will result in a profit, loss or any
other desired result for the subject reader and/or buyer. The reader and/or
buyer assumes all the risk, including but not limited to loss, of capital
consequential to their investment actions. (SEE: FULL
DISCLAIMER)
Price growth is the 12-month increase in the price of a
stock (displayed as a percentage). As of 01/18/06, MITCHAM had a 3-month growth
rate of 115.4% (vs. the Industry's 19.3% rate), a 6-month rate of 139.5% (vs.
the Industry's 28.9% rate), and a 12-month rate of 246.3% (vs. the
Industry's 81.6% rate).
(Refs.:
MSN Money\Research). ACE'S gives a preferential rating to a company that have
demonstrated a solid capacity for high price growth and outperforming other
stocks in the Industry. ACE'S rating of
MITCHAM's
Price Growth: EXCELLENT.