RE:RE:RE:Wake up, mr market!Hi Walden,
You are right, OGD is quite cheap. Thinking about it, their margin are depressed for a good reason : investment in staff as well as mobilisation costs. In both cases, these are investments in the future that should give them more revenus, so taking the hit now before revenu materializes.
If you listen to MDI conference call that benefited from higher drilling prices in July, you can assume that margins should go to between 25-30% and even better if they repeat the historical cycle.
They clocked gross margin of 6,9% this quarter. Lets say, they can increase to 25%. And they booked revenus over 50 millions. So 50 millions at an incremental margin by 20% would give 10 millions. Lets say that they are taxed at 30%, so 7 millions after tax. With 40 millions shares o/s, these guys would have made .175 this quarter. Annualize it and you get .70/share. Of course, you can poke holes in this as it is a rough estimate but this shows yout he potential of a 1.10 stock.
So, a bit dissapointed about the net earnings but this stock is cheap, very cheap. But all drillers are cheap :(.
There is not a lot of potential suitors. Foraco and Boart are still working on their debt load. MDI would be the only one and they would drive a high bargain. However, thinking about it, they would sure be able to take off some of that SG&A. But this is a long shot.
GLTA