Monday, January 31, 2011

Pulse Seismic Inc

In January 2009, when I was looking for a small cap dividend paying stock, this is one of the stocks I analyzed. I reviewed this stock last in June of 2009 and I am again looking at it to see how it is fairing. The reason I did not invest in this stock was because it wasn’t earning money. Reviewing what analysts are saying now about it, they do not expect this company to have positive earnings until this year. 2010 is expected to have negative earnings again.

The most interesting thing I find about this stock is that there is insider buying (about $1.6M) and no insider selling. This is the same as when I last reviewed this stock. The CEO and CFO both have more options that shares, but this is not true of other insiders and of the directors. A lot of insiders have a healthy number of shares (that is in the 100,000 plus range) in this company. There are three larger investors that own around 36% of the shares. This is certainly a plus for this company.

Certainly, the company has not done well over the past 5 years. This includes cutting out the dividends in 2009. No one seems to have made any money in this stock over the past 5 years. Over the past 5 years, revenues, earnings, book value, cash flow, and total return are all down. The bright spot is the Asset/Liability Ratio, which has fallen since the end of 2009, but still at a health 2.10. The Liquidity Ratio used to also be very good, with a 5 year average of 2.98. However, the current one is just 1.07. This is because the company is running down its cash. Where you want to see both these ratios is at 1.50. The Leverage Ratio is also getting worse. The 5 year average is good at 1.63, but the latest ratio is at 1.91. This ratio is not that high, but worrisome that it is climbing.

However, the 10 year growth statistics are much better than the 5 year one. Those who have held the stock for 10 years have done well with total returns in the range of 10 to 14%. The recession seems to have been hard on this company, but this is because they sell information to the oil and gas industries. Cash Flow, Revenue and Book Value are up over the past 10 years. Although the revenue per share is flat because of the increase in the number of shares outstanding for this company.

Because the company is not making any money, we cannot judge this stock by the Price/Earnings Ratio. However, if the company earnings $.04 per share in 2011, it puts the P/E ratio at 54.8. This is a high ratio. I get a Graham price based on $.04 earnings in 2011 of $1.15. The Graham Price was higher in 2005 at $2.36. The 10 year average is $1.87. These are both lower than the current stock price of 2.19. This stock has had a recent run in price as it was just $1.70 at the beginning of the year.

The Price/Book Value is currently at 1.49. This is some 30% above the 10 year average of 1.15, but only 7% higher than the 5 year average of 1.39. Since this stock no longer has a dividend and I do not know when it will again, you can not judge the stock by dividend yield.

When I look at analysts recommendations, I find a couple of Strong Buy recommendations and one Hold recommendation. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) There are only a few analysts following this stock. The analysts with the Strong Buy recommendations feel this stock is very undervalued. Here is a recent article about this stock.

Pulse Data Inc. is a provider of 2D and 3D seismic library data and is based in Calgary, Alberta. Pulse owns the second-largest licensable seismic data library in western Canada. Pulse’s 2D and 3D seismic data library extends over the Western Canada Sedimentary Basin, plus selected areas of the U.S. Rocky Mountains region and northern Canada, with a particular focus on active exploration areas. Its web site is here Pulse Seismic. See my spreadsheet at psd.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

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