OTCPK:AVEFF - Post by User
Post by
93Darkhorse93on Apr 08, 2017 1:35pm
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Post# 26096068
Pricing/Gross Margin will Improve with Demand Recovery...
Pricing/Gross Margin will Improve with Demand Recovery...I accept your skepticism but I must disagree, revenue growth will be accompanied by pricing power which should be pulled through to gross margin expansion. Gross Margin is highly correlated to Rig Count growth which bottomed near the end of Q1 to the beginning of Q2 in 2016
In Q1 ’15 thy had revenue of 36.6M and gross margin of 11.16% (which includes amortization). That 25-30M range is a critical point for Aveda because that this the point at which Aveda’s cost structure begins to generate positive EBITDA. Seeing that they already announced revenue for Q4 of 31M gross margin will continue to recover QoQ and YoY.
Since the Rig count is up another 28% from the beginning of the new year, you could be looking at 14M run rate monthly revenue or 168M for 2017 (Even if a single rig is not added from this level) when analyst are only at 140M.
Trading at only 3x 2017 EBITDA on my numbers its worth a look given your downside is limited as the financing was done right at this price.