ENERFLEX LTD., $11.78 - Toronto symbol EFX

ENERFLEX LTD., $11.78 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 77.7 million; Market cap: $915.3 million; Dividend yield: 2.4%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration equipment and power generators. The company has a strong position in three fastgrowing markets: U.S. and Canadian shale gas production; Australian natural gas from coal beds; and conventional Middle Eastern natural gas, which is converted to liquefied natural gas (LNG) for shipping. Natural gas prices are low, but companies continue to increase their drilling and production. In the quarter ended September 30, 2012, Enerflex’s revenue jumped 31.0%, to $369.7 million from $282.3 million a year ago. Strong demand from international customers pushed the company’s sales higher. Without one-time items, earnings per share rose 22.7%, to $0.27 from $0.22, due to the higher revenue and improved profit margins. The company holds cash of $125.6 million, or $1.62 a share. Its $121.5 million of long-term debt is just 13.3% of its market cap. International orders surging The company’s U.S. and Canadian customers have slowed their natural gas drilling activity, but strong orders from Australian and Middle Eastern LNG producers has more than offset that shortfall. Enerflex trades at 11.1 times its forecast 2013 earnings of $1.06 a share. The company has raised its quarterly dividend by 16.7% with the January 2013 payment, to $0.07 from $0.06. The stock now yields 2.4%. Enerflex is a buy.

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