Geodrill Limited GEODF

Completely undervalued

[screamer99]

The SP should double by year's end after Q3-21 results are released.

Over the last 5 years, annual EBITDA ranged between $15m and $20m.  In the most recent quarter (Q1-21), EBITDA was $10m.  The Company has a net cash position and is printing money. The initiation of the dividend speaks to this.

From what I can tell, the company's association with West Africa required a discount relative to its peers, but profits are profits.  I think some jurisdictions had unreasonably high tax rates in previous years which sucked up their operating cash but the company has pulled out of these areas and is diversifying into South America and these two moves are helping with operating cash flow.

Receivables are at a record high and when collected in Q2-21 cash will be flowing in.

$10m of EBITDA was earned in Q1-21 but le's say you reduce that to $8m a quarter.  $32m for the year.  8 times EBITDA multiple (which I think is conservative).  $256m enterprise value.  With cash higher than debt, no need to reduce the enterprise value for net debt.

With almost 50m shares on a diluted basis, that gives you $5.12 in USD.  Convert to CAD as the financials are in USD and you get a little over $6.00 CAD.

Use a multiple of 10x and you're close to $8.00 CAD.  If you think the quarterly EBITDA run rate is $10m and not $8m, then you're looking at over $8.00 CAD.

I'm sure there will be some that will be taking profits in the coming days but this will be a hard one to not be in.

I see one analyst with a $3.25 target but his quarterly EPS is only around $0.6 for the rest of the year.  We just had a quarter with $0.13 and all signs are pointing to similar levels for the rest of the year.

I don't see how this can trade below $5.00 in the coming months.  Show me otherwise!

[shareholders1]

Agree with most points. My comments about dilution stand. Shareholders have many risks and issues  to deal with. Macro- economic risk, micro/ sector risk, stock market risk, company specific risk, and if that is not enough, unless they manage their own money shareholders must pay fund managers 1% to 2.5% and sometimes much, much  more with % perfomance bonuses. Then on top if it

[screamer99]

Profitability now trumps those risks, in my view.  But don't take my view.  Here's another view that was posted just minutes ago. Geodrill and "absurdly cheap" used in the same sentence.  Also looking at 100% upside from here. A Seeking Alpha article: https://stockhouse.com/news/newswire/2021/05/18/geodrill-absurdly-cheap-pick-and-shovel-play-on-commodity-boom

[FrozenInOntario]

Hey Screamer, Thanks for posting.  This article infers that Geodrill is the best drilling operator.   Not an expert in this field, but they might have benefited from competitors leaving the region in the last years.  Major did wind down Burkina a couple of year ago.  And OGD had some recent legal problem now successfully resolved.    And wonder if Boart

[screamer99]

These operational insights are great.  Not something I completely considered as I didn't intend to be in GEO for long, until the Q1-21 results were released.  It initially appeared on a stock screen and when I looked further, I was sold on the opportunity based on their financial strength as opposed to in relation to their peers. For the same argument I'm using for GEO, I can

[FrozenInOntario]

Hi, On summer activity and cyclicality :  note the rainy season runs during May to September in West Africa.  This is why their third quarter is slower.   So factor this in your projections.   I also understand that mobilisation takes less time/costs when you are based in Western Africa and get a contract in the region.   These costs are bound to increase

[screamer99]

Q2 revenues have outperformed Q1 revenues over the last 4 years so I'm optimistic with this Q2 being no different.  Espcially with more rigs and higher utilization. If Q2-21 is another $10m+ EBITDA quarter, and Q3 and Q4 hold at $6m each, which I think is likely, we're at the $32m EBITDA I used in my example which I think will put over the $5 mark in due course. The company will

[savyinvestor333]

Don't forget Cabo Drilling as another bankrupcy case.