Insiders own 27% (mostly all Murray Edwards) and there has been minor net buying in the past six months. Net debt and other obligations are $1.3B, compared with $369M in cash flow and $183M in free cash flow in the trailing 12 months. It is still a very leveraged company, and this is likely why it has underperformed. Based on consensus, EPS is expected to more than double next year. No doubt it is a very cheap stock, and energy companies are flush with cash. However, most have been paying dividends and buying back stock, instead of drilling. ESI's consistency is an issue: it misses forecasts 75% of the time. This week it reported a 3Q loss on only a tiny increase in revenue. It has targetted debt reduction of $200M this year and $600M through 2025, and if this happens investors will likely pay more attention. In the sector, with so many companies debt free and paying a dividend, it has a hard time getting attention. We would note that interest expenses were $130M in the past 12 months, and with rising rates investors are just cautious. We think it could do well under the right conditions, but also needs to be considered risky until debt comes down.
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