Q: Pays big Dividend and price continues down. Should we bail or will someone buy them out and save us. Down about 40%.
5i Research Answer:
BIR is a small-cap oil and gas company and is now trading at 9.2x times the forward P/E. The balance sheet is fine, with net debt of $332M and net debt/EBITDA of 0.9x. Similar to other oil names, BIR’s performance will depend largely on oil and gas prices, both of which have been under tremendous pressure recently. BIR’s dividend yield is attractive, and the payout ratio has looked fine in the past but is a bit tighter than we would maybe prefer to see in the last few quarters. At this level of valuations, a lot of the damage is likely done and we would consider at least holding into the New Year to see if beaten down names like this see a bit of a bounce and then reassess.