And to Addjust to point out the last news release:
". The extended contract term will be funded by further increasing the contract ceiling value by $75 million."
lets figure out some future earnings then. average net profit after tax for CGY has been about 5% over the years (I've analyzed the last 10 of them out of 33 years that CGY has been public). and average P/E ratio has been about 12 give or take a little. Based on this contract addition alone, the earnings would be:
+75000000 revenue ( this is +31% of last years revenues alone!!) x 5% = 3,750,000 in net earnings (thereabouts based on historical data). If I am reading right the contract is one year so earnings should be there over the next 12 months then....assumption.
Even at 3% net on 75000000 = 2,250,000 x 12 (P/E avg conservatively) = 27,000,000 added value / 7399199 shares = +$3.65 share. These are both very conservative since I am using a 12P/E when people are paying 17.42 P/E today.
Earnings yield based on 2015 earnings (1.32/sh) and todays share price = 5.8%.....earnings yield based on the MD&A statements where they said earnings between $1.59-$1.89 (adjusted) are in range (can a new ceo afford to be significantly lower than the low end of their estimates? or at all?) using 1.59 and todays share price earnings yield = 6.9 %. Average earnings yield has been about 8% over the years. So still reasonably priced.
If the market has happily paid 12 times earnings for many years then under that information we should comfortable be able to say total accretion to CGY should be 3,750,000 x 12 P/E = 45,000,000 to the value of CGY.
45,000,000 of added value = 45,000,000 (future earnings based on additional 75MM from DND renewal) / 7,399,199 (shares outstanding) = +$6.08/share. So if we say this breakout started at $20 then 25-26 share price is completely reasonable based on this alone and is most likely why we are seeing the price move as it is.
It does not take much to move CGY due to a low float (7399199 shares). It is also hard to get in if someone wants in since it is very illiquid which is fine for me, I prefer it. So if a larger player wants in they have to either do a block trade from somewhere if shares are available or buy on the open market without distorting the share price.
Good for me and you the current shareholders. Still excellent vlaue here with a rock solid and should be an increasing dividend based on increasing earnings and backlog.
The only thing that stands out to me with CGY is a low gross margin and dropping. This indicates competition and they are being squeezed. How much competition is unknown to me but there must be enough. However, the net is still consistent and cashflow is very strong so they manage well and is not a concern. Nice to have a backlog of work in this economic environment.