Pick-of-the-Month Stock-2 (January 2006)
Stock Name SYM Exch. Sector Industry Date Picked Pick Price
(per share)
Mitcham Industries Inc. MIND NASD Services Rental & Leasing 01/13/06 $20.72

      Mitcham Industries Inc. specializes in the short-term leasing of seismic equipment to the
oil and gas industry. Seismic technology provides accurate data for identifying oil and gas deposits, making it an
invaluable tool for exploration companies striving to increase productivity and reduce exploration costs. The cost of acquiring the state-of-the-art seismic equipment can run as high as $4.5 million.
Mitcham solves the high cost of seismic equipment acquisition for exploration companies by leasing the equipment and offering maintenance and support to companies on a short-term basis. The Company has sales and services offices in Calgary, Canada, Brisbane, Australia, Singapore and the United Kingdom; and with associates throughout Europe, South America and Asia, Mitcham is among the largest independent exploration equipment lessor in the industry.

For the nine months ended 31 October 2005, Mitcham's revenues increased 26% to $24.5M. Net income from continuing operations totaled $6.2M, up from $622K. Mitcham had a 3-month price growth rate  of 115.4% (vs. the Industry's 19.3% rate), a 6-month rate of 139.5% (vs. the Industry's 28.9% rate), and  a 12-month rate of 246.3% (vs. the Industry's 81.6% rate).  The Company was founded in 1987 and has its corporate offices in Huntsville, Texas. Number of employees: 68.

Sector: Service; Industry: Rental & Leasing; Ticker: MIND;  Exch: NSDQ;  01/13/06 Price: $20.72) 

STOCK GRADE (ASG: 48.07)  

BUSINESS & FINANCIAL SUMMARY (Yahoo)
EXPANDED BUSINESS DESCRIPTION (Reuters)
STOCK INFO/RESEARCH (MSN)

OWNERSHIP (MSN)
KEY DEVELOPMENTS & RECENT NEWS (MSN)

HISTORICAL PRICES (Yahoo)
COMPANY'S WEB SITE
STOCK'S CORE STRENGTHS (SEE: Table Below)   

Management's Effectiveness (12 Mo.) . . . Return on Equity:     21.07%
Profitability (12 Mo.) . . . Profit Margin:       24.32%
Stock's Growth Record (12 Mo.) . . . Revenue:      17.68%
. . . EPS:    154.05%
. . . Price:    207.42%
. . . Dividend:        NA
PE & EPS (12 Mo.) . . . Price/Earnings:       26.50
. . . Earnings/Share:         0.78
Price / Share . . . As of 01/13/2006:    $20.72



MITCHAM COMPANIES, INC. - EVALUATION


MITCHAM's
stock emerged as an  ACE'S selection based on the evaluation results of the criteria listed below. The evaluation results are encapsulated as one value in ASG (short for ACE'S Stock Grade). ASG is proprietary variable that was devised by ACE'S to measure the quality of a stock for investment.

MITCHAM's ASG value of 48.07 is GOOD.

A. MANAGEMENTS EFFECTIVENESS - EXCELLENT 
B. PRODUCTS & SERVICES, SET OF -
GOOD 
C. SALES -
AVERAGE 
D. CASH FLOW, FREE -
AVERAGE
E. PROFITABILITY -
 BELOW  AVERAGE 
F. PRICE-EARNINGS RATIO (P/E) -  EXCELLENT (COMPARABLE TO INDUSTRY'S AVERAGE) 
G. FINANCIAL HEALTH - EXCELLENT
H. MARKET CAPITALIZATION -
EXCELLENT
I. TRADED VOLUME -
 GOOD 
J. PRICE GROWTH - EXCELLENT
 

A. MANAGEMENTS EFFECTIVENESS - EXCELLENT    

How well a company performs generally - in its business operations, controlling costs,  the success of its products and services in the market place, profitability, and the like - depends on its management's efficiency. Return on Equity (ROE) is used as a general indication of the company's efficiency.

MITCHAM's ROE (ttm) of 18.5% is higher (by about 10.7% and 2.7% points correspondingly) than the Industry's ROE of 7.8% and the S&P 500's ROE of 15.8%.
(Ref.: MSN Finance\Key Ratios).

  ACE'S gives a preferential rating to a company that has a comparable or relatively higher ROE than the Industry. ACE'S rating of MITCHAM's Management's Effectiveness: EXCELLENT.

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 B. PRODUCTS & SERVICES, SET OF - GOOD     

Products and services are the elements that enables a company to have a presence in its target market and generate sales. The set of products and services that a company has and how successful those products and services performs in the target market are very important factors in considering a company's stock for investment.

MITCHAM's line-up of Products & Services.  Land systems; marine and transition; cable and sensors; land energy sources, engineering and environmental items; peripherals; vehicles; and miscellaneous supplies. 

   LAND SYSTEMS

MITCHAM's  land systems are seismic data acquisition processors and recorders. The products in this group are composed of  the following: telemetry systems (cable, RF and testing equipments), radio systems, CDP systems, and refraction systems. The products are provided by Sercel, Input/Output (I/O) and GEO-X Systems of Canada.

   MARINE & TRANSITION

MITCHAM's marine & transition products are composed of the following: Streamers, buoys, marine energy source
controllers
.

   CABLES & SENSORS

MITCHAM's  cable & sensor products are composed of the following: Hydrophones, geophones, marsh phones, and telemetry cables.

   LAND ENERGY SOURCES

MITCHAM's land energy source products are composed of the following: Vibrators & Drills, shooting systems, and vibrator electronics.

  PERIPHERALS

MITCHAM's peripherals are composed of the following: Tape transports, plotters, heli bags, test equipment, and cameras.

   ENGINEERING & ENVIRONMENTAL

MITCHAM's engineering & environmental products are composed of the following: GPR (Ground Penetrating Radar and accessories), refraction systems, and geophones.

  VEHICLES

MITCHAM's vehicular products are composed of the following: Trucks, recording cabs, and boats.

  MISCELLANEOUS SUPPLIES

MITCHAM's miscelaneous supplies are composed of the following: Molding & splicing items, recording tapes, and
flagging items.


.
  ACE'S  gives a preferential rating to a company who  have more than one product and services  that have present and continued  utility in a broad and dynamic  market. An estimation of the latter products' utility, distinctive qualities and competitiveness would be subjective assessments. However, there is one objective data that indicates how well the subjective elements of MITCHAM's products and services are assessed and used by its target market - the company's sales.

 ACE'S rating of MITCHAM's line-up of Products & Services:  GOOD

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C. SALES -  AVERAGE 

Sales is an important indicator on how a company's products and services performs in its target market. Generally, a high sales figure is preferred than a lower figure. Also, a steady and appreciable growth in a company's total sales from one year to the next is a key indicator on how a company is able (or unable) to sustain and improve the utility of its products and services in the marketplace.

MITCHAM's annual sales was $20.6M in 1/2001, $27.2M in 1/2002, $19.2M in 1/2003, $22.4M in 1/2004 and $26.4M in 1/2005.
(Ref.: MSN Money\Financials)MITCHAM's ttm annual sales of $31.5M was 95.9% less than the Industry's  sales of $769.8M.  MITCHAM's ttm Sales growth rate of 26.50% was 9.60% points lower than the Industry's rate of 36.10%.   (Ref.: MSN Money\Research).

  ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain a high and progressively increasing level of sales  from year-to-year. MITCHAM's year-to-year annual sales - from 2001 to 2005 - was maintained in the $19.2M to $27.2M range. In terms of sales volume, the Companies past 12 month sales is 95.90% less than the Industry. In terms of growth rate, MITCHAM's rate trails the Industry by 9.60% points.   ACE'S rating of MITCHAM's Sales Growth Rate: AVERAGE.

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D. CASH FLOW, FREE -  AVERAGE  

Cash flow is crucial to the operation and survival of companies. A company having ample ready cash ensures that creditors, employees, and others can be paid on time. Cash flow could be considered as a better measure of a business's profitability than earnings, because a company can show positive net earnings and have insufficient cash flow (that is, the company is not able to pay its debts). Cash Flow thus can be used as an indicator of a company's financial strength.

MITCHAM's cash flow during the past 5 years: $13.3M in 1/2001; $12.3M in 1/2002;  -$1.8M in 1/2003; $4.5M in 1/2004; and $17.0M in 1/2005.
(Ref.: MSN Money\Financials).

 ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain a positive and appreciable cash flow from year-to-year. MITCHAM's year-to-year cash flow - from 2001 to 2005 - declined to -$1.8M in 2003; and rebounded from the latter low point to the 5-year high of $17.0M level in 2005.  ACE'S rating of MITCHAM's Cash Flow: AVERAGE.

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E. PROFITABILITY - BELOW  AVERAGE  

Making a profit is the ultimate goal of every company. A useful gauge of a company's profitability is its net income (also referred to as "earnings").  Related to a company's outstanding shares of common stocks, the company's total earnings is transformed to "earnings per share" (or "EPS" for short). EPS is a very popular indicator of a company's profitability and a powerful variable that influences the price of a company's stock.

MITCHAM's annual Net Income, for the past 12 months, of $7.7M is 22.3% of the Industry's Income of $34.5M). For the past 5 years, MITCHAM's  annual Net Income are: -$2.9M in 1/2001; -$8.5M in 1/2002; -$10.1M in 1/2003; -$6.3M in 1/2004; and $2.1M in 1/2005.  In terms of growth, MITCHAM's Net Income have grown 787.6% during the past 12 months (vs. the Industry's 95.40% growth rate).
(Refs. MSN Money\Financials\Statements; MSN Money\Wizard)

  ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain a positive, appreciable and increasing net  income..MITCHAM's year-to-year annual Net Income - from 2001 to 2004 -were negative, ranging from -$10.1M to -$2.9M. In 2005, the Company's net income rebounded to the plus side ($2.1M). In terms of income growth rate, MITCHAM's rate surpasses the Industry by 692.2% points.   ACE'S rating of MITCHAMs Profitability: BELOW AVERAGE.

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F. PRICE-EARNINGS RATIO (P/E) - EXCELLENT (COMPARABLE TO INDUSTRY'S AVERAGE)  

A stock's Price-Earnings ratio tells us roughly how much investors are willing to pay per dollar of earnings. Price-Earnings is a ratio of a company's current share price compared to its per-share earnings. The P/E ratio is a much better indicator of the value of a stock than the market price alone.

In general, a high P/E means high projected earnings in the future. As such, the P/E ratio could be interpreted as the reflection of the market's optimism concerning a firm's growth prospects. To determine whether a particular P/E is high or low, take into account a company's growth rates; and the P/Es of other companies in the same industry. Historically, the average P/E ratio in the market has been around 15-25.

MITCHAM has a P/E ratio of 26.50 (ttm) which is 0.61 higher than the Industry's P/E of 25.89 (ttm)
(Ref.: Yahoo! Finance\Competitors)

ACE'S gives a preferential rating to a company that has a comparable or relatively lower P/E than the Industry.  ACE'S rating of MITCHAM's P/E Ratio: EXCELLENT (COMPARABLE TO INDUSTRY'S AVERAGE)

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G. FINANCIAL HEALTH - EXCELLENT  

The assumption of debt, i.e., financial leverage, are used by companies to finance its assets. The magnitude of the debt's expense component affects the company's net income.

A company with significantly more debt than equity is considered to be highly leveraged. A popular measure of financial leverage is the "debt/equity ratio". A higher debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This higher ratio can result in volatile or negative earnings as a result of the additional interest expense. Thus, the Debt/Equity Ratio is popularly used as a measure of a company's financial health.

MITCHAM's has a 0.07 Debt/Equity Ratio (latest 12 months). Compared with the Industry's 0.26 and the S&P 500's 1.07, MITCHAM has an excellent debt ratio.
(Refs.: MSN Money\Ratios)

ACE'S gives a preferential rating to a company that has a comparable or relatively lower debt ratio than the Industry.  ACE'S rating of MITCHAM's  Debt Ratio: EXCELLENT.

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H. MARKET CAPITALIZATION -  EXCELLENT  

Market Capitalization (or market cap for short) is a measure of a company's size. The market cap provides a broad gauge of the growth-versus-risk potential of a company. Historically, large caps have experienced slower growth with lower risk; whereas small caps have experienced higher growth potential, but with higher risk.

The market cap of a company is calculated by multiplying the number of its outstanding shares by the shares' current market price. There are presently six classes of Market Cap: Mega Cap, Big/Large Cap, Mid Cap, Small Cap, Micro Cap and Nano Cap.

MITCHAM is a small cap growth  company with a market capitalization of $210.92M and with outstanding shares of 9.26M.
(Refs.: Yahoo! Finance\Statistics)

 ACE'S gives a preferential rating to small and mid cap companies.  ACE'S rating of MITCHAM's  Market Cap:  EXCELLENT.

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I. TRADED VOLUME -  GOOD  

A stock's price goes up or down based on the laws of supply and demand. Simply stated, when a stock's price goes up, there must be significant buying demand for the stock. Volume is the actual number of shares traded daily. Traded volume could be used as a gauge of the demand for a stock.

MITCHAM has an 3-month Average Daily Volume of 226,476 shares; and a 10-day Average Daily Volume of 452,800 shares.  
(Refs.: Yahoo! Finance\Statistics)

 ACE'S gives a preferential rating to a company that sustains a lively trade volume from week-to-week and month-to-month.  ACE'S rating of MITCHAM's  Traded Volume: GOOD.

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J. PRICE GROWTH - EXCELLENT  

Price growth  is the 12-month increase in the price of a stock (displayed as a percentage). As of 01/18/06, MITCHAM had a 3-month growth rate  of 115.4% (vs. the Industry's 19.3% rate), a 6-month rate of 139.5% (vs. the Industry's 28.9% rate), and  a 12-month rate of 246.3% (vs. the Industry's 81.6% rate). 
(Refs.: MSN Money\Research).

ACE'S gives a preferential rating to a company that have demonstrated a solid capacity for high price growth and outperforming other stocks in the Industry.  ACE'S rating of MITCHAM's  Price Growth: EXCELLENT.

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  Last modified: 10/12/14