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GEOS- Geospace Tech Corp.


cmattporter
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Geos sells land and sea seismic instruments to the energy industry. Their financials are growing and stable. Cash alone covers their liabilities in full. Cash flow is average; no stock or debt issuances.

 

Although I've been analyzing Geos for a year now, they dropped 15% Friday, March 21 because of a troubled $30MM order. SGS, the customer in question, is having capital commitment problems and had to delay the order. This will effect Geos 3rd quarter results if SGS can't finance the order.

 

Geos is at it's 52 week low and I'm anticipating a heavy order. If you've analyzed Geos value I'd appreciate your comment.

 

matt

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  • 7 months later...

This post was a while ago but I have been checking out this stock so I thought I would comment.

 

Basically the company is in a cyclical industry which is driven by oil company capital spending. They get large custom contracts from oil companies and there are long periods where they have no contracts. Oil companies are cutting back on capital spending after a huge binge and are focusing on rewarding shareholders and cutting costs.

 

http://business.financialpost.com/2014/10/03/falling-prices-put-pressure-on-cost-controls/

 

This means this company will suffer for a while. The spending will return when oil prices increase again. When they do the company will almost certainly rebound hugely and will probably be a multi-bagger. The reason is that the earnings will spike because a lot of large orders from many companies will come in at the same time.

 

I feel like waiting longer to buy it. The retrenchment of oil companies is just beginning. And this company should suffer nicely as long as this is happening.

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