Precision Drilling (PD)

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CompounderIndexer
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Precision Drilling (PD)

Post by CompounderIndexer »

Does anyone have an opinion on Precision Drilling at the current levels, $9.15? Thinking of taking a small position, but wanted to hear a few educated opinions. At least a couple of 'pundits' are high on the company.
Taggart
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Re: Precision Drilling (PD)

Post by Taggart »

I don't know. Can't figure it out. For the last few year's, everytime a drilling company is mentioned, it always seems to be Precision's name always comes up. I then compare the financials to Akita Drilling and if I was in the market I'd prefer this company any time. Price ratios, I don't see a lot of difference between the two companies, but that's about it. Akita has no long term debt, whereas Precision has a fair bit. Where Akita hasn't shown consistent dividend growth every year, it at least has been growing it's dividend over the last ten years, wheras Precision's has been cut in the past and basically hasn't gone anywhere. Akita has been growing it's book value over the last ten years, where again Precision's book has gone nowhere. I guess I've already shown my favouritism, but then again, I'm not an analyst, so your decision.

All financial comparisons between the two companies done at Morningstar.
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Peculiar_Investor
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Re: Precision Drilling (PD)

Post by Peculiar_Investor »

I was a Precision Drilling shareholder many years ago, with the view of holding forever. I exited when it became abundantly clear that the management group was looking more after their own interests rather than the interests of the shareholders. The trigger event was turning the company into an income trust in 2005, they sold off excellent, non-Canadian, assets to Weatherford IIRC. They converted back to a corporation again in 2010. Read this Financial Post article, Precision saga proves trusts bad for business, and this one from the Calgary Herald, Precision Drilling chairman Hank Swartout took home nearly $75 million in salary, bonuses and stock options in 2005, to gain some understanding of management's performance. I realize that current management is different from those days, but I would be cautious that the management culture hasn't lived on.

Once burned as a shareholder, I'm very unlikely to reinvest in a company, there are too many other options available.

There is an older topic from when Precision Drilling was a trust, see http://www.financialwisdomforum.org/for ... 3&t=103487

My $0.02
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AltaRed
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Re: Precision Drilling (PD)

Post by AltaRed »

I never was a shareholder of PD, partly because of its prior history as a trust and partly due to management behaviour. Too many managements of the O&G trust days acted like their companies were personal ATMs. These days, it is like many cyclicals in the oil patch, buy/sell as part of sector rotation during the commodity business cycle, not as a buy and hold. Money can be made at it but needs constant handholding. Its 10 year chart is telling.
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nisser
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Re: Precision Drilling (PD)

Post by nisser »

Out of the 2 already mentioned, the other one I considered in the bunch is PHX Energy. Out of the 3, I feel like buying Akita personally.

P/E
Akita 9.3
PHX 9.2
PD 12.4

EPS
Akita 1.32
PHX 1.28
PD 0.74

P/B
Akita 0.9
PHX 2.0
PD 1.1

Debt
Akita 0%
PHX 34%
PD 41%

ROE
Akita 9%
PHX 26%
PD 8.9%

Div%
Akita 2.79% [with 26% payout ratio]
PHX 7.22% [66%]
PD 3.06% [32%]
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Re: Precision Drilling (PD)

Post by nisser »

TTM Operating cash flow 65 million
TTM Interest expense 144 million
Total Debt 1778 million


:shock:
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