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CFO Invests in Layne Christensen

- By Kyle Ferguson

Michael Anderson, chief financial officer and senior vice president of investor relations at Layne Christensen Co. (LAYN), purchased 2,000 shares on April 13.

He paid an average price of $7.92 per share according to SEC filings.


Anderson now owns 8,000 shares total.

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Headquartered in The Woodlands, Texas, Layne Christensen is a water management, construction and drilling company. The company provides drilling solutions for water management, mineral services and specialty drilling needs. It operates through four segments: Water Resources, Inliner, Heavy Civil and Mineral Services.

The company operates throughout North America, Africa, Australia, Europe, Brazil and through its affiliates in other South American countries. Layne's customers include government agencies, investor-owned utilities, industrial companies, global mining companies, consulting engineering firms, heavy civil construction contractors, oil and gas companies, power companies and agribusiness.

In 2002, the company entered the energy industry and now develops and produces gas from tight shales and coal seams.

Layne Christensen has a market cap of $175.07 million, an enterprise value of $268.47 million and a price-book (P/B) ratio of 1.95.

According to GuruFocus, the company has a 5 of 10 financial strength rating with a cash-debt ratio of 0.43 and an equity-asset ratio of 0.19. The Piotroski F-Score of 3 is low, which usually implies poor business operations. Its Altman Z-Score is 0.85, indicating it is under financial stress and could potentially file for bankruptcy within the next two years.

The company has a 4 of 10 profitability and growth rating. It has an operating margin of -4.02%, a net margin of -8.68%, a return on assets (ROA) of -11.09% and a three-year revenue growth rate of -8.30%.

Over the past five years, the company has averaged a 7.94% decline in revenue, a 12.75% decline in capital spending, a 4.25% decrease in earnings per share and a 10.57% decrease in cash flow.

The stock price has fallen an estimated 61% over the past five years.

According to the Peter Lynch chart below, Layne Christensen is trading below its intrinsic value.

Disclosure: Author does not own any shares of this company.

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This article first appeared on GuruFocus.