ENERFLEX LTD. $19.28 - Toronto symbol EFX

ENERFLEX LTD. $19.28 (Toronto symbol EFX; TSINetwork Rating: Extra Risk) (403-387-6377; www.enerflex.com; Shares outstanding: 78.5 million; Market cap: $1.5 billion; Dividend yield: 1.6%) rents and sells equipment and services for natural gas production, including compression and processing plants, refrigeration gear and power generators. On June 30, 2014, the company completed the $430 million U.S. acquisition of two businesses owned by privately held Axip Energy Services LP, an international contract compression and processing subsidiary, and a division that provides aftermarket services.

In the quarter ended June 30, 2014, strong orders in the U.S. and Canada pushed up Enerflex’s revenue by 43.4%, to $446.1 million from $311.0 million.

Earnings per share rose 37.5%, to $0.33 from $0.24 a year earlier. The Axip assets had not yet made a contribution to the company’s results; the gains came from new, high-profit-margin orders.

Growing backlog adds appeal

Enerflex booked $414.3 million of orders in the latest quarter, up 30.5% from $317.5 million a year earlier. Its backlog now stands at $867.9 million, up 24.4% from $697.8 million a year ago.

The company holds cash of $129.6 million, or $1.65 a share. Its long-term debt of $415.4 million is a reasonable 27.7% of its $1.5-billion market cap.

The stock trades at 21.4 times Enerflex’s forecast 2014 earnings of $0.90 a share. However, it trades at a more reasonable 15.4 times the company’s estimated 2015 earnings of $1.25 a share. It yields 1.6%.

Enerflex is still a buy.

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