On Thursday, Alberta-based Enterprise Group Inc. (E:TSX.V) announced its results for the second quarter.
Among the several things that are noteworthy—and underscore just how dramatically the company’s businesses are growing, even if most investors are still asleep at the switch here—is that there was such an impressive financial performance in what is typically the slowest quarter of the year for the company.
Yet—though its share price has more than doubled off its post-pandemic low—Enterprise shares are still absurdly cheap.
Revenues of about CA$5.3 million were some 64% higher than 2021’s second quarter. And further, Enterprise’s similarly heady jumps in EBITDA and a near-tripling in the company’s gross margins saw the company record a net profit for the quarter also.
Wrapping up 2022’s first half, management stated, “The first six months of the year has been one of the strongest in recent history. Higher capital spending in the energy industry combined with increased customer activity levels in has resulted in improved results. . .”
The total turnaround in fundamentals and outlook alike for Canada’s energy industry generally—and for the ongoing huge development project of LNG Canada particularly, which Enterprise is an integral equipment and service provider for—will by all appearances be continuing apace.
Yet—though its share price has more than doubled off its post-pandemic low—Enterprise shares are still absurdly cheap, I.M.O. At a recent CA$.40 each, they sell for scarcely half the company’s break-up value.
And extrapolating ahead the kind of revenue and earnings growth I anticipate that the company is selling for
1. less than its annualized revenue and 2. six to eight times its likely earnings.
Ridiculous.
The company and its management, at least, know a bargain when they see one. So far, in 2022, Enterprise has bought back 670,000 of its shares. This brings the grand total of repurchases since the present program began to 8,928,500 shares, nearly 20% of the equity previously outstanding. And management—led by President & C.E.O. Len Jaroszuk—has been personally buying.
In my last conversation with Senior Vice President Des O’Kell a few days ago, he informed me that the company was on the edge of announcing work has been completed for Enterprise shares to be listed on the OTCQB here in the U.S. That should lead to far more significant numbers of investors in the U.S. being able to take their positions in this leading—and CHEAP—Canadian energy services player.
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