PHX Energy Services (PHX:TSE) Fundamental Valuation Report

PHX Energy Services (PHX:TSE) Fundamental Valuation Report

Fundamental Valuation Report

PHX Energy Services(PHX:TSE)

Energy:Oil & Gas Drilling

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$2.80 (CAD) 03/30/2021

Weighted Valuation
$2.73 (CAD)

Overall Rating
Fairly valued to slightly Overvalued by 2.4%

Valuation Models Adjusted Book Value: $2.20 (CAD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $4.25 this stock is Undervalued

Company Overview (PHX:TSE CAD)

Price 2.80
Range 2.80 – 2.80
52 week 0.55 – 3.03
Open 2.80
Vol / Avg. 0/54707
Mkt cap 140.46M
P/E 0.00
Div/yield 0.03/0.02
EPS -0.15
Shares 50.17M
Beta 2.77

Company Description

PHX Energy Services Corp is a Canadian service provider company. It is principally engaged in providing horizontal and directional drilling services, as well as web-based remote electronic drilling recorder technology and services, to oil and natural gas exploration and development companies in Canada, United States, Albania, and Russia. The services provided by the company includes directional drilling and motor rentals, survey management, gyro surveying and stream services. Geographically, the company operates in Canada, United States, and International. The majority of the company’s revenue comes from the United States.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for PHX:TSE

Using a discounted cash flow model we generated an intrinsic value of $1.76 (CAD) for PHX:TSE

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

PHX:TSE Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $1.76 1% 5% 1% 5%
WACC (or Ke) 16.62 $1.96 $1.58
Terminal Growth Rate 3.00 $1.61 $1.93
Tax Rate 0.18 $1.96 $1.56
Cash Flow 39,496,996 $1.55 $1.97
Capital Expenditures -15,103,458 $1.70 $1.82
Long Term Debt 28,869,361 $1.79 $1.73

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $2.42 (CAD) for PHX:TSE. We also generated a valuation of $1.84 (CAD) using other metrics and comparables.
The comparable companies were Western Energy Services (WRG:TSE), Ensign Energy Services (ESI:TSE), Akita Drilling (AKT.A:TSE) and Precision Drilling (PD:TSE).

Company PHX:TSE End Date Value
Earnings/Share ($0.15) (CAD)
Book Value/Share $2.63 (CAD)
Sales/Share $4.45 (CAD)
Cash Flow/Share $1.29 (CAD)
EBITDA/Share $0.50 (CAD)
Price Based on Comps Adjustment Factor (%)
$0.00 (CAD) -32.0
$0.52 (CAD) 94.0
$1.36 (CAD) -41.9
$0.95 (CAD) 65.8
$5.81 (CAD) 0.0
PHX:TSE Ratios Used Average Values WRG:TSE ESI:TSE AKT.A:TSE PD:TSE
0.00 PE Ratio 0.00 0.00 0.00 0.00 0.00
1.06 PB Ratio 0.20 0.15 0.13 0.26 0.25
0.63 PS Ratio 0.31 0.32 0.19 0.33 0.39
2.17 PCF Ratio 1.31 1.19 0.72 1.73 1.61
5.85 EV to EBITDA 11.61 25.61 4.24 0.00 4.99

Multiples

Using a multiples approach we generated a valuation of  $3.93 (CAD) for PHX:TSE

Company PHX:TSE End Date Value
Earnings/Share ($0.15) (CAD)
Book Value/Share $2.63 (CAD)
Sales/Share $4.45 (CAD)
Cash Flow/Share $1.29 (CAD)
EBITDA/Share $0.50 (CAD)
Price Based on Comps Adjustment Factor
$0.00 (CAD) 0
$2.12 (CAD) 0
$2.34 (CAD) 0
$8.91 (CAD) 0
$2.33 (CAD) 0
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 0.81
PS Ratio 0.53
PCF Ratio 6.90
EV to EBITDA 4.67

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  PHX:TSE for the last 10 years was  0.84

We ran the Adjusted Book Value for  PHX:TSE and generated a book value of  $2.61 (CAD)
By multiplying these we get an adjusted valuation of  $2.20 (CAD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for PHX:TSE. The 4 analysts have a concensus valuation for PHX:TSE for 2021 of $4.25 (CAD).

PHX:TSE PHX Energy Services

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
3 1 0 4.5000 Outperform 2021-3-29

Current Price: 2.8 CAD

Analyst Consensus
CAD Millions 2021 2022 2023
Mean EPS 0.08 0.26 0.23
# EPS Analysts 3 3 1
Mean Revenue 259.70 304.20 341.00
# Revenue Analysts 4 4 1
Mean Target Price 4.25
Mean Cash Flow 0.67 0.88 0.77
Mean EBITDA
Mean Net Income
Mean Debt Outstanding
Mean Tax Rate
Mean Growth Rate
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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