SAExploration Holdings Inc (NASDAQ:SAEX), a $18.47M small-cap, is an oil and gas company operating in an industry which has persevered through an extended oil price slump since 2014. However, energy-sector analysts are forecasting for the entire industry, a highly optimistic growth of 37.94% in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the US stock market as a whole. Should your portfolio be overweight in the oil and gas sector at the moment? Below, I will examine the sector growth prospects, and also determine whether SAExploration Holdings is a laggard or leader relative to its energy sector peers. View our latest analysis for SAExploration Holdings
What’s the catalyst for SAExploration Holdings’s sector growth?
Much of the oil and gas industry has survived an especially tough few years with weak demand and low prices. Large energy businesses have slashed their growth expenditures by over 40% since the collapse, and reduced headcount by nearly half a million workers. Only now has the sector begun to emerge from its turmoil, and in the previous year, the industry saw growth in the teens, beating the US market growth of 9.86%. SAExploration Holdings lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means SAExploration Holdings may be trading cheaper than its peers.
Is SAExploration Holdings and the sector relatively cheap?
The energy sector’s PE is currently hovering around 25.2x, above the broader US stock market PE of 19.7x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry returned a lower 6.21% compared to the market’s 10.44%, illustrative of the recent sector upheaval. Since SAExploration Holdings’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge SAExploration Holdings’s value is to assume the stock should be relatively in-line with its industry.
SAExploration Holdings recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If the stock has been on your watchlist for a while, now may be the time to buy, if you like its ability to deliver growth and are not highly concentrated in the energy industry. However, before you make a decision on the stock, I suggest you look at SAExploration Holdings’s fundamentals in order to build a holistic investment thesis.
- 1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 2. Historical Track Record: What has SAEX’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- 3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of SAExploration Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.