Q: Could you please give me opinion of this company? It's controlled by Waterhouse energy fund which owns 55% insiders were buying heavy oil play. Would you buy this company?
5i Research Answer:
Market cap is $456M; shares are down 36% this year. Shares are very tightly held and only two analysts follow the company. The balance sheet has a bit of leverage, nothing serious. Estimates though call for lower earnings this year and even lower earnings next year. Sales declined about 30% in the Q3. It is currently raising $300M via a rights offering. We don't mind it raising money to pay down debt, but after the stock decline it is a bit painful for owners to give it more money. While we do not seeing anything majorly wrong here, there is not enough here for us to endorse it as a buy, especially when peers in the sector are just as cheap, pay a dividend (GFR does not) and have better balance sheets and current growth.