PASON SYSTEMS $21.70 (Toronto symbol PSI; TSINetwork Rating: Speculative) (403-301-3400; www.pason.com; Shares outstanding: 82.1 million; Market cap: $1.8 billion; Dividend yield: 2.4%) rents equipment for monitoring and managing oil and gas rigs. It also sells communication technology, such as its satellite system, which companies use to remotely collect data from their drilling operations. Pason serves oil and gas producers and drilling contractors throughout Canada, the U.S., Mexico, Argentina and Australia.
In the three months ended June 30, 2013, Pason’s revenue fell 2.1%, to $82.4 million from $84.1 million a year earlier. Less drilling in the U.S. and Canada offset strong international sales. Still, cash flow per share rose 5.1%, to $0.62 from $0.59. That’s because the company cut costs at its U.S. operations, which account for 71% of its revenue.
Pason holds cash of $195.4 million, or $2.38 a share, and has no debt.
The company raised its quarterly dividend by 8.3% with the April 2013 payment, to $0.13 from $0.12. It also switched to quarterly dividends from semi-annual payouts. This latest increase followed a 9.1% hike with the January 2013 payment. The shares now yield 2.4%.
The stock has risen 49% in the past year, even with volatile oil and gas prices. The near-term outlook for North American drilling is uncertain, but Pason’s longterm prospects look positive. Even with the stock’s rise, it trades at just 10.7 times the company’s forecast 2013 cash flow per share.
Pason Systems is still a buy.
