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Jeff Williams
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Jeff is a published author and educator. He is a value/dividend investor who specializes in long term growth. He lives in a beautiful seaside town in Canada with his wife and two children.
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  • Flotek Industries: Small Cap With Strong Balance Sheet In Good Sector 0 comments
    Feb 11, 2013 8:48 AM | about stocks: FTK

    Over the past couple of years, the Oil and Gas equipment service industry has been evolving rapidly. With the introduction of new fracking techniques, increased safety regulations and domestic construction demands showing no signs of slowing down, these factors have given the industry a boost. One of the companies looking to capitalize on this growth is Flotek Industries (FTK).

    In the article below, I will look at the Flotek Industries past profitability, debt and capital, and operating efficiency. Based on this information, we will get to see the company's sales, returns, margins, liabilities, assets, returns and turnovers. We will get an understanding of how the company has grown over the past few years, thus keeping up with industry trends and what to expect in the future.

    All numbers sourced from Company Webpage and Morningstar.

    Profitability

    Profitability is a class of financial metrics used to assess a business's ability to generate earnings compared with expenses and other relevant costs incurred during a specific period of time. In this section, we will look at four tests of profitability. They are: net Income, operating cash flow, return on assets, and quality of earnings. From these four metrics, we will establish if the company is making money, and gauge the quality of the reported profits.

    • Net Income 2010 = $(43) million.
    • Net Income 2011 = $31 million.
    • Net Income 2012 TTM = $28 million.

    Over the past three years Flotek's net profits have increased from $(43) million in 2010 to $28 million in 2012 TTM. This signifies a $71 million dollar increase in earnings over the past 3 years.

    • Operating Cash Flow 2010 = $(6) million.
    • Operating Cash Flow 2011 = $49 million.
    • Operating Cash Flow 2012 TTM = $63 million.

    Operating cash flow is the cash generated from the operations of a company, generally defined as revenue less all operating expenses, but calculated through a series of adjustments to net income.

    Over the past three years, the company's operating cash flow has also increased. Flotek's operating cash has increased by $69 million.

    To read more: Flotek Industries: Small Cap With Strong Balance Sheet In Good Sector

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