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  5. SHLE: Can I have your opinion on this companies earnings and growth potential both in the short and long term? [Source Energy Services Ltd.]
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Q: Can I have your opinion on this companies earnings and growth potential both in the short and long term? Do you think they are a target to be acquired? Thank you
Asked by Cory on July 02, 2025
5i Research Answer:

The stock is exceptionally cheap at 4X earnings but that has not prevented a 13% YTD decline. The balance sheet is a bit levered but nothing too concerning. Insiders own 14% and have been net buyers in 2025. It's interesting, but very small and cyclical. Certainly at its valuation some other companies might be interested but we doubt management would be. EPS is expected to surge this year, and rise 10% in 2026. Still, it has a mixed history of volatile earnings, including losses. Its small size is a drawback, but the stock is picking up steam, up more than 100% since the market's April lows. We would consider it OK, mainly because of the very low valuation, offsetting its other risks.