GGS bought some...Comdex trader is buying and noted this..he wrote a book on it the other day... He wnt into the quarter in depth too..but it's long
.... decline on a bad quarter in GGS, it got me interested to look further.
It should be noted that, when GGS IPO'd on April 22, 2010, its 7.5 mln share IPO priced at $12, well below the expected $15-$17 range. Also, the deal size was cut from the previously expected amount of 9.5 ln shares. Total gross proceeds were $90 mln, or ~40% less than originally planned.
Before today, the 52-week avg = $3.61 (Dec 7, 2012) to $11.59 ( Feb 27, 2012). Now it's $2.96-11.59 after the co hit a new all-time low. GGS has thin sell-side coverage and has low avg trading volume. Only one sell-side analyst covers GGS, which is Dahlman Rose. The 3-mo volume is approx..154K shares. Today, almost 1 mln have changed hands so far today.
However, it has an interesting service that customers in the oil patch have paid for in the past. And we can't ignore the fact that earnings are expected to grow 220% to $0.48/share in 2013. This is an on adjusted basis and would be its highest earnings seen in a year, if realized. Revenue is expected to grow in 2013 by 4.6% to $354.66 mln.
Revenue breakdown by customer base... co isn't relying on just a few customers. In FY11 (2012 data is not avail yet) two NOC's represented more than 10% of the co's total sales at 17% and 13%, respectively. No other customers represented more than 10% of its sales. In 2011 co had 44 customers that each represented more than $1 mln in revenue. Two customers each represented more than 10% of our Proprietary Services segment revenue at 31% and 25%, respectively. One customer represented more than 10% of Multi-client Services segment revenue at 17%. By the nature of the co's business, it is common for its top customers to change from year to year.
A little color on GGS' business
GGS and its subsidiaries, provide an integrated suite of seismic data solutions to the global oil and gas industry, including its high resolution RG-3D Reservoir Grade ("RG3D") seismic solutions. Co's seismic data solutions consist primarily of seismic data acquisition, microseismic monitoring, processing and interpretation services. Through these services, the co delivers data that enables the creation of high resolution images of the earth's subsurface and reveals complex structural and stratigraphic details.
These images are used primarily by oil and gas cos to identify geologic structures favorable to the accumulation of hydrocarbons, to reduce risk associated with oil and gas exploration, to optimize well completion techniques and to monitor changes in hydrocarbon reservoirs. Co integrates seismic survey design, data acquisition, processing and interpretation to deliver enhanced services to its clients. In addition, co owns and markets a growing seismic data library and license this data to clients on a non-exclusive basis.
Its seismic solutions are used by many of the world's largest and most technically advanced oil and gas exploration and production companies, including national oil companies ("NOCs"), major integrated oil companies ("IOCs"), and large independent oil and gas companies. Co provides seismic data acquisition on a worldwide basis for land, transition zone and shallow marine areas, including challenging environments such as marshes, forests, jungles, arctic climates, mountains and deserts. Co also have significant operational experience in most of the major U.S. shale plays, including the Haynesville, Barnett, Bakken, Fayetteville, Eagle Ford and Woodford, where the co believes itsr high resolution RG3D seismic solutions are particularly well-suited.
On the quarter, the co said "Global's fourth quarter results were a disappointment as execution issues in certain programs and delays in library late sale closures impacted the top line. Since joining the company four months ago, we have started and are continuing to make a number of changes to address the issues contributing to the fourth quarter's performance. We expect those changes to result in improved operating performance starting in the second half of 2013."
On the conf. call, the co said, "While we had a disappointing quarter, the overall outlook for E&P spending remains robust, particularly on the international front and our observations on recent tendering and bidding activity confirmed this view. With E&P spending expected to continue its upward trends and increase by roughly 7% in 2013 over 2012 levels, we expect the overall market for size and grid related services to remain healthy. Although North America remains fluid, increased service intensity for Proprietary programs should drive higher utilization levels over coming quarters."
Just the law of averages dictates one can make good money on this stock at this price. The ONLY risk you are taking is that they will not be able to stay in business and that seems extremely unlikely given the assets. technology, and management that they have. Take ANY stock at random, just pick one out of thin air. You will see there is a 50% difference between the 52 week high and low. That's just how the "market" works and is the result of the quarterly fixation. NOBODY can forecast every single quarter with great precision and in the real world stuff happens. That doesn't mean there is really anything wrong - the entire year could work out exactly according to plan but if any given quarter is bad the "market" thinks the stock is bad and you get this exact sort of charade we have seen this week with GGS. Normally by buying at or near the 52-week low of any stock you can make a decent return and by buying at the all-time lows with a healthy company you can make stellar returns.
Such will be the case here. The company is in good shape with good products, customers, management and probably the best technology in the space. They are simply transitioning and future results will bear that out. You don't get all that many chances to catch this sort of ridiculous dislocation in price vs. reality and this is an absolute gift from the market idiocy we see every quarter without fail.
"However, it has an interesting service that customers in the oil patch have paid for in the past. And we can't ignore the fact that earnings are expected to grow 220% to $0.48/share in 2013. This is an on adjusted basis and would be its highest earnings seen in a year, if realized. Revenue is expected to grow in 2013 by 4.6% to $354.66 mln."