Q: can you explain why a company with a p/e ratio of under 1 is not selling at a higher price. What am I missing?
5i Research Answer:
SOIL is a $328.6M company with a revenue base of ~$396M, and over the past 12 months it has generated net income of $392, however, it also was cash flow negative over the past 12 months. All of its cash from operations were eroded by increased CAPEX spending, which was funded by a combination of debt and share issuance. Its debt levels are quite high, but its valuation is also very low, but right now this is common in the oil and gas sector as commodity prices continue to weaken. SOIL has demonstrated some good qualities, and insiders have been buying. Its lack of dividend and relatively small size are probably the main drawbacks here.