We have followed Enterprise Group (TSX: E, OTC: ETOLF) for a while, and all we can say is the company never disappointed. The company that specializes in equipment and services in building infrastructure for the energy, pipeline, and construction industries returned positive earnings again, strengthening its balance sheet. More than ever, the company looks attractive, and the current market cap is incredibly undervalued.
What Makes Enterprise Group Unique?
Enterprise Group (TSX: E, OTC: ETOLF), offers a variety of services, including the leasing of specialized machinery to the energy and resource industries. The company places a high priority on systems and technologies that reduce, eliminate, or at least minimize CO2 and greenhouse gas emissions for both itself and its clients. The firm is well-known in Western Canada among regional Tier One and global resource corporations.
In April 2022, Enterprise Group publicly unveiled Evolution Power Projects, a brand-new, completely owned corporation. EPP is the leading provider of low emission mobile power systems and surface infrastructure to the industrial, resource, and energy sectors.
Modern methods used by the company give its customers access to micro-grid and low-emission natural gas-powered systems, enabling them to totally do away with diesel. A sizable portion of the Enterprises’ capital expenditures for 2022 were for more natural gas-powered systems, such turbine generators.
Also, the company promotes sustainability. By making new technology investments that allow us to be a top provider of tools and services that significantly lower the emissions of Enterprise’s clients and help them achieve their ESG goals, Enterprise is constantly developing quantitative measures and techniques to track and improve the company’s performance in relation to ESG aspects.
The company’s financials keep improving Year-over-Year. Cash and cash equivalents stood at $1.54M, 45% up compared to 2022. For the three months ending March 31, 2023, Enterprise Group’s total assets represented $58.6M for $21.2M in total liabilities. Revenues topped $10M and were 31% up YoY, and gross margin improved to $5M. The most significant expenses for the company were the depreciation of property, plant and equipment ($1M) and also general and administrative expenses ($700k). After all the expenses, the company managed to keep $2.8M, representing a net income and comprehensive income of $0.06.
Regarding the share structure and thanks to the share buyback program, the number of shares issued and outstanding lowered to only 50.2M. A total of 694,000 shares were repurchased and cancelled by the company at a cost of $266,215 (2022 – 1,799,000 shares at a cost of $714,614). In line with the TSX-approved issuer bid made in the ordinary course, the shares were bought on the open market. On August 26, 2022, Enterprise Group extended its offer, setting a termination date of August 29, 2023, or any earlier period at which the Company chooses to complete or terminate the offer. The company doesn’t have warrants and only 566k exercisable stock options at $0.45.
About the stock price, it remained relatively steady over the last year and appears to be a safe investment. The stock price is currently worth $0.42 at the time of writing (March 10) and hovered between $0.32 to $0.46 over the last 52 weeks.
What Could Drive Oil & Gas Needs Higher?
According to the US Energy Information Administration and its STEO (Short-Term Outlook) for May 2023, Global liquid fuels production in its forecast increases by 1.5 million b/d in 2023 compared with 2022 primarily because of growth from non-OPEC producers. Excluding production from Russia, which the US Energy Information Administration forecasts to fall by 0.3 million b/d in 2023, it expects that non-OPEC liquid fuels production will increase by 2.2 million b/d in 2023 and by an additional 1.1 million b/d in 2024.
“More than 60% of oil and gas company executives surveyed by the Federal Reserve Bank of Dallas say they plan to increase their capital spending in 2023 versus last year while an even greater number expect input costs to rise further this year.”,” the Oil and Gas Journal reports. By 2023, investment in Alberta is anticipated to total $28.0 billion, or almost 70% of all upstream oil and natural gas investment made nationwide. The conventional and oil sands industries are driving the increase in investment. Remember that, behind Venezuela, Saudi Arabia, and Iran, Alberta’s oil sands have the fourth-largest oil reserves in the world. The known reserves in Alberta’s oil sands are equivalent to around 160.1 billion barrels (bbl).
What Should Your Remember About Enterprise Group (TSX: E, OTC: ETOLF) ?
- The company is specialized in equipment and services in the build-out of infrastructure for the energy, pipeline, and construction industries;
- The company works against CO2 and greenhouse gas emissions for both itself and its clients;
- Recent earnings showed the company is profitable and returned $0.06 per share during the last trimester;
- Shares are repurchased on the market and then canceled, reducing the number of shares issued and outstanding;
- Alberta’s investment in the oil and gas industry remains relatively strong and represents 70% of all the national’s industry investment.