Varun Arora
Research analyst, oil & gas, base metals, long/short equity

Why Is It The Right Time To Buy Precision Drilling

Executive Summary

Initiating Coverage

I am initiating coverage on Precision Drilling Corporation (NYSE:PDS) with a 12-month target price of $18 and a return of 35%. Precision Drilling is currently trading at a multiple of 7.7x EV/EBITDA, 7.21x P/CF and 1.82x P/Tangible Book Value. At a target price of $18, the implied multiples are 9.7x EV/EBITDA, 9.5x P/CF and 2.4x P/Tangible Book Value. The target price was arrived at using the sum-of-parts approach, while independently valuing the two business segments of Precision Drilling, namely: Contract Drilling Services and Completion and Production Services. The WACC based DCF valuation methodology was applied for valuing the Contract Drilling segment and trading multiples methodology was used for...

Join Seeking Alpha PRO to read this archived article and 11,574 other archived articles
IDEA GENERATORXExclusive access to 10 PRO ideas every day
INVESTING IDEAS LIBRARYXExclusive access to PRO library of more than 15,000 ideas
SECTOR EXPERT NETWORKXExclusive access to all sector experts for direct consultation
PERFORMANCE TRACKINGXTrack performance of all PRO stock ideas
PROFESSIONAL TOOLSXProfessional Idea Filters to zero-in based on industry, market cap and more
"In just the first month of using PRO, I used it to generate two ideas which were actionable for me. As a result of these two positions, I have earned more than 20 times the annual subscription costs for PRO."Michael Yagemann, Greenbridge Capital
"I am pleasantly surprised with the scope of small and mid-cap coverage PRO offers. You can't find that any where else."Patrick Rice, Mainstay Capital Management
You may cancel at any time for any reason, and receive a prompt refund for membership on months paid and not used (max. 6 months). Details