Q: Peter and His Wonder Team
When you look at geopolitics, international tariffs and the companies strength do you think it is a buy at this level? If not what is it's biggest risk? Thanks for your professional opinion.
When you look at geopolitics, international tariffs and the companies strength do you think it is a buy at this level? If not what is it's biggest risk? Thanks for your professional opinion.
5i Research Answer:
There are small company risks here, and a cyclical business. There is also a very high level of debt, which we would consider the biggest risk. Earnings have been volatile, and sales are below historical levels (it has divested assets, however). Strong earnings growth is expected, and the stock is cheap at 11X earnings. Insiders own very little. Largely serving the energy industry, much of course will depend on sentiment and prices. Tariffs could raise costs and hurt margins, and half of its business is in the US. We would not see it as hugely attractive in the current market.