Q: It’s seems that the stock is enjoying its marked rise at this time , Is it due to possible merge or a buy from other company? It’s apparently much above its book value and by itself its future growth will not be marked. Is it indeed overvalued and could be sold ? The dividend is good so it could be kept as a dividend payer as one wait for buyout or a merger. What is your opinion on thei stock at this time ?
Thank you ,
Miroslaw
Thank you ,
Miroslaw
5i Research Answer:
With good momentum and shares at only 14X earnings, we doubt management would agree to a takeover unless there was a giant premium. Hostile takeovers do not usually work well in the sector. Insiders own 6%. The balance sheet is very strong with $122M net cash. Cash flow is good. We have no reason to believe it is a 'target' right now and frankly with its financial strength we think it is more likely to acquire something itself, than be acquired. We think it is attractive, within the context of the energy sector volatility.