Dawson Geophysical Company (DWSN) $4.66 on 04/06/15
Dawson didn’t
wait for my planned post. Thursday 04/02/15 DWSN moved up .34 or 8.45% on the
day. Today it closed higher. It was thoughtless selling (-74% over 52
weeks) without an equivalent correlated destruction in operations or asset's value. This out sized uncorrelated price action to asset’s replacement value
motivated the investigation.
Dawson Geophysical Co provides seismic data acquisition services
throughout the United States and Canada. The Company acquires geophysical data
using 3-D survey techniques. Seismic crews
supply data to companies exploring oil, natural gas. Further, they serve the
potash mining industry. The Company currently owns equipment for 16 land-based
seismic data acquisition crews and 73 vibration vehicles. Dawson Geophysical
was founded in 1952.
Existing assets are available at a
deep discount to its history and industry. Enterprise value is 109.42 (MC =
100.20M + Ttl Liab = 52.622M – Cash 43.394M) or 89.70M using excluding current liabilities.
Total Assets for the MRQ are 246.840M,
Non cash assets are 203.44M (246.840-43.394 = 203.44M). EV to Non Cash Assets =
.44 or 89.70EV/203.44Non Cash Assets.
These assets generated 118.847M 2014 annual revenue. Produced net cash
provided by operating activities, $9,255,375 for the year ended December 31,
2014.
Dawson controls a major portion of
the domestic onshore seismic market. The seismic industry particularly DWSN has
been indiscriminately crushed. But DWSN strong financial position
will take it to the other side of this industry depression. Dawson's market share gains coupled with competitors
closing or taking on excessive debt will reward long term shareholders.
October 2014 Dawson smartly agreed
to a merger with TGC Industries (TGE). This provides synergies, access to Canada,
modest overhead reduction. After the combination, New Dawson has 21.70M shares
outstanding.
Reasons to consider a closer look for longer term investors.
Historical low valuations using EV to sales, EV to GP, EV to non cash assets, P/TB (see table below)
21% of shares outstanding held by insiders.
Institutional ownership from respected value institutions, Royce, Robeco, Perritt and others.
No Wall Street coverage
Mean reversion candidate down -74% prior 52 weeks,
Debt free market leader in land based geophysical services,
Contrarian industry idea with strength to lead industry niche once market improves
No 2015 insider selling
Strategic business combination with TGC Industries, October 2014. TGC has a strong balance sheet, complementary equipment, expanded client base, creates an opportunity for improved utilization rates and overhead reduction.
Reasons to consider a closer look for longer term investors.
Historical low valuations using EV to sales, EV to GP, EV to non cash assets, P/TB (see table below)
21% of shares outstanding held by insiders.
Institutional ownership from respected value institutions, Royce, Robeco, Perritt and others.
No Wall Street coverage
Mean reversion candidate down -74% prior 52 weeks,
Debt free market leader in land based geophysical services,
Contrarian industry idea with strength to lead industry niche once market improves
No 2015 insider selling
Strategic business combination with TGC Industries, October 2014. TGC has a strong balance sheet, complementary equipment, expanded client base, creates an opportunity for improved utilization rates and overhead reduction.
