Enerflex Ltd. (NYSE: EFXT)

Sector: Energy Industry: Oil & Gas Equipment & Services CIK: 0001904856
Market Cap 2.35 Bn
P/B 2.04
P/E 17.29
P/S 0.94
ROIC (Qtr) 9.50
Div Yield % 0.00
Rev 1y % (Qtr) 29.28
Total Debt (Qtr) 721.00 Mn
Debt/Equity (Qtr) 0.62
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About

Investment thesis

Bull case

  • Healthy cash reserves of 64M provide 2.91x coverage of short-term debt 22M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 2.40B provides 3.32x coverage of total debt 721M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 279M provides strong 10.33x coverage of stock compensation 27M, indicating sustainable incentive practices.
  • Tangible assets of 2.40B provide exceptional 6.62x coverage of deferred revenue 362M, showing strong service capability backing.
  • Robust tangible asset base of 2.40B provides 10.99x coverage of working capital 218M, indicating strong operational backing.

Bear case

  • Operating cash flow of 279M barely covers its investment activities of (86M), with a coverage ratio of -3.24, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 64M against inventory of 331M, the 0.19 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 279M provides thin coverage of dividend payments of (15M) with a -18.60 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Operating cash flow of 279M provides insufficient coverage of deferred revenue obligations of 362M, which is 0.77x, raising concerns about future service delivery capabilities.
  • Operating earnings of 287M show weak coverage of depreciation charges of 166M, with a 1.73 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the Oil & Gas Equipment & Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SLB Slb Limited/Nv 59.56 Bn 20.77 2.67 11.64 Bn
2 BKR Baker Hughes Co 59.13 Bn 22.85 2.13 6.09 Bn
3 FTI TechnipFMC plc 28.99 Bn 127.65 1.96 1.34 Bn
4 HAL Halliburton Co 28.83 Bn 22.47 1.30 8.13 Bn
5 WFRD Weatherford International plc 7.39 Bn 17.15 1.50 1.64 Bn
6 NOV NOV Inc. 7.09 Bn 48.90 0.81 2.34 Bn
7 VAL Valaris Ltd 6.32 Bn 15.83 2.61 1.09 Bn
8 KGS Kodiak Gas Services, Inc. 4.56 Bn 91.00 3.58 2.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.06 1.17
EV to Cash from Ops. EV/CFO 10.87 -3.30
EV to Debt EV to Debt 4.21 10.99
EV to EBIT EV/EBIT 10.57 4.49
EV to EBITDA EV/EBITDA 6.52 6.54
EV to Free Cash Flow [EV/FCF] EV/FCF 16.31 31.31
EV to Market Cap EV to Market Cap 1.29 1.36
EV to Revenue EV/Rev 1.21 2.02
Price to Book Value [P/B] P/B 2.04 1.73
Price to Earnings [P/E] P/E 17.29 20.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 9.07 0.42
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 5.49
Dividend per Basic Share Div per Share (Qtr) 0.00 0.26
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 6.68
Interest Coverage Int. cover (Qtr) 3.30 -10.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -102.17 -37.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -32.63 1,334.16
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.06
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -50.58 -12.71
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 56.04 19.66
EBIT Growth (1y) % EBIT 1y % (Qtr) 254.32 -26.68
EBT Growth (1y) % EBT 1y % (Qtr) 1,350.00 39.97
EPS Growth (1y) % EPS 1y % (Qtr) 271.87 27.30
FCF Growth (1y) % FCF 1y % (Qtr) -42.41 -867.31
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 19.88 5.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.88 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.04 0.10
Cash Ratio Cash Ratio (Qtr) 0.07 0.62
Current Ratio Curr Ratio (Qtr) 1.24 2.25
Debt to Equity Ratio Debt/Equity (Qtr) 0.62 0.88
Interest Cover Ratio Int Coverage (Qtr) 3.30 -10.19
Times Interest Earned Times Interest Earned (Qtr) 3.30 -10.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.10 16.47
EBIT Margin % EBIT Margin % (Qtr) 11.46 -0.62
EBT Margin % EBT Margin % (Qtr) 7.98 4.39
Gross Margin % Gross Margin % (Qtr) 23.10 30.41
Net Profit Margin % Net Margin % (Qtr) 5.40 2.67