Forum Energy Not Losing Steam
I say "perceived" because Forum Energy's absolute results have held up pretty well compared to, say, Cameron International
With ongoing improvements in global energy spending, which has compelled General Electric
The thing is, these projects come at cost. So investors are unsure of what to make of the company's promises. They've taken a wait-and-see attitude, which is why the stock has been range-bound over the past twelve months. The company has incurred some debt, yes. But it's manageable and doesn't portend the "uphill battle" some analysts are making it out to be.
Despite some recent obstacles, Forum Energy is still growing revenue at a 22% rate. And this is while also building a strong presence in international markets. What's more, with these stocks trading off of order growth, it's still a little surprising that Forum Energy trades at a price-to-earnings ratios that is 2 points and 7 points below Cameron and FMC, respectively.
In the October quarter, for instance, there were concerns that Cameron and National Oilwell Varco
Plus, the $354 million in total orders was consistent with orders in July quarter. Digging deeper into the numbers, investors would realize that bookings, in fact, had increased. Yet, I've read that weak bookings cited as cause for the stock's lack of movement. And there was also increased demand for drilling capital equipment, well construction and completion products.
The October quarter also revealed a book-to-bill ratio of 91% for the company as a whole. In other words, this is the proportion of orders Forum Energy received to what the company was able to deliver during the quarter.
This means demand was strong across the board. Not to mention, book-to-bill ratio for production and infrastructure came in at 85% and 94% for drilling at subsea. (For some context, a book-to-bill ratio above 1% is considered good.) It's only a matter of time before the Street realizes how undervalued Forum Energy is.