Article by Motley fool ESI ABSURDLY CHEAP Valued at $440 million by market cap, Ensign Energy (TSX:ESI) provides oilfield services to the crude oil and natural gas industries. It offers well drilling and specialized drilling services to energy companies. In 2023, Ensign Energy derived close to 60% of its sales from the U.S., 25% from Canada, and the rest from international markets.
The company reported revenue of $1.79 billion in 2023, an increase of 14% year over year. Ensign attributed the increase in sales to favourable industry conditions and revenue rate improvements. Its adjusted EBITDA stood at $490.2 million, up 31% compared to 2022, while funds flow from operations rose by 25% to $465 million.
An increase in profit margins and cash flow allowed Ensign to reduce its balance sheet debt by $217.6 million. In the last five years, it has reduced net debt from $1.68 billion to $498 million. In fact, Ensign reduced its net debt by more than $1 billion since 2019 despite completing two accretive acquisitions totalling $163 million.
Priced at 7.5 times forward earnings, Ensign Energy stock is quite cheap, given analysts expect earnings per share to improve from $0.22 per share in 2022 to $0.53 per share in 2025. Analysts tracking the TSX energy stock remain bullish and expect it to surge over 50% in the next 12 months.
Ensign ended 2023 with a funds flow of $2.53 per share, which indicates the stock is priced at less than one times trailing cash flow, making it one of the cheapest energy stocks in Canada.