By Steven Ralston, CFA
ENSERVCO (OTC BB:ENSV) reported preliminary financial results for the fourth quarter of 2013. Management announced that total revenues are expected to have increased 33% to $15.0 million, which is approximately $1.0 million above our expectations. The robust fourth quarter would bring full-year revenue to $46.3 million, which represents a 47% increase over 2012 results. Audited full-year 2013 financial results are expected to be reported by mid-March.
The fourth quarter revenue gain was driven by the capacity additions to the service fleet and very strong demand for fluid heating services. The outstanding revenue gain was attained despite some delays in receiving several new fluid heating units from the company’s fabricator, which is still working on a backlog created by the floods last September in Colorado. Additional units are expected to be delivered by the end of January.
We reiterate our Outperform rating and raise our target to $2.30, which is based on price-to-sales (P/S) and enterprise value-to-EBITDA (EV/EBITDA) valuation methodologies. Enservco is a small-capitalization company with a growing revenue profile that should continue to expand as management invests in the underlying businesses, deepens the company's presence in existing markets and expands into new service territories. The target was determined after evaluating the current price-to-sales and EV/EBITDA of comparable companies.
Early next week, ENSERVCO’s President, Rick Kasch, will be presenting at Sidoti & Company's Semiannual Micro-Cap Conference on January 13th at the Grand Hyatt in New York City.
A copy of the full research report can be downloaded here >> Enservco Report
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