Solaris Energy Infrastructure, Inc. (NYSE: SEI)

Sector: Energy Industry: Oil & Gas Equipment & Services CIK: 0001697500
Market Cap 1.56 Bn
P/B 7.58
P/E 67.36
P/S 5.33
ROIC (Qtr) 9.30
Div Yield % 1.08
Rev 1y % (Qtr) 122.40
Total Debt (Qtr) 545.22 Mn
Debt/Equity (Qtr) 1.00
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About

Solaris Oilfield Infrastructure, Inc. (SOI), a company based in Houston, Texas, operates in the oil and natural gas services industry. This industry is highly competitive, and Solaris has established a strong competitive advantage through its all-electric equipment that automates the low-pressure section of oil and gas well completion sites. The company's offerings are designed to drive efficiencies that reduce operational footprint and costs during the completion phase of well development. Solaris' primary business activities involve the design,...

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Investment thesis

Bull case

  • Healthy cash reserves of 106.70M provide 4.95x coverage of short-term debt 21.55M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 1.40B provides 2.56x coverage of total debt 545.22M, indicating robust asset backing and low credit risk.
  • Strong operating cash flow of 126.27M provides 2.24x coverage of SG&A expenses 56.29M, showing efficient operational cost management.
  • Tangible assets of 1.40B provide exceptional 208.11x coverage of deferred revenue 6.72M, showing strong service capability backing.
  • Strong free cash flow of (387.57M) provides 16.91x coverage of acquisition spending (22.92M), indicating disciplined M&A strategy.

Bear case

  • Operating cash flow of 126.27M barely covers its investment activities of (537.16M), with a coverage ratio of -0.24, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 126.27M provides thin coverage of dividend payments of (19.05M) with a -6.63 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 106.70M provide limited coverage of acquisition spending of (22.92M), which is -4.66x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High receivables of 130.37M relative to inventory of 13.85M (9.41 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of (387.57M) provides weak coverage of capital expenditures of 513.84M, with a -0.75 ratio suggesting additional external financing needs for growth initiatives.

Segments Breakdown of Revenue (2024)

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 1.03 1.17
EV to Cash from Ops. EV/CFO 18.29 -3.30
EV to Debt EV to Debt 2.96 10.99
EV to EBIT EV/EBIT 45.52 4.49
EV to EBITDA EV/EBITDA 18.75 6.54
EV to Free Cash Flow [EV/FCF] EV/FCF 61.77 31.31
EV to Market Cap EV to Market Cap 1.03 1.36
EV to Revenue EV/Rev 5.51 2.02
Price to Book Value [P/B] P/B 7.58 1.73
Price to Earnings [P/E] P/E 67.36 20.20
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.75 0.42
Dividend Payout Ratio % Div Payout % (Qtr) 50.00 5.49
Dividend per Basic Share Div per Share (Qtr) 0.48 0.26
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -8.37 6.68
Interest Coverage Int. cover (Qtr) 3.08 -10.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -645.33 -37.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.44 1,334.16
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 4.06
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 217.31 -12.71
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 160.46 19.66
EBIT Growth (1y) % EBIT 1y % (Qtr) 244.52 -26.68
EBT Growth (1y) % EBT 1y % (Qtr) 198.33 39.97
EPS Growth (1y) % EPS 1y % (Qtr) 118.18 27.30
FCF Growth (1y) % FCF 1y % (Qtr) -42,737.40 -867.31
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 102.79 5.49
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.34 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.03 0.10
Cash Ratio Cash Ratio (Qtr) 0.98 0.62
Current Ratio Curr Ratio (Qtr) 2.40 2.25
Debt to Equity Ratio Debt/Equity (Qtr) 1.00 0.88
Interest Cover Ratio Int Coverage (Qtr) 3.08 -10.19
Times Interest Earned Times Interest Earned (Qtr) 3.08 -10.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 29.90 16.47
EBIT Margin % EBIT Margin % (Qtr) 15.49 -0.62
EBT Margin % EBT Margin % (Qtr) 10.46 4.39
Gross Margin % Gross Margin % (Qtr) 41.20 30.41
Net Profit Margin % Net Margin % (Qtr) 6.70 2.67