Dawson Geophysical Offers Favorable Reward/Risk Amid Industry-Wide Slump
- DWSN stock lost 45% in a year, in line with almost all peers amid industry-wide slowdown in seismic data investments by E&P oil and gas companies.
- Current steep sales slump seems to be temporary, caused only by project delays, not cancellations. So far, bookings still remain strong. Nevertheless, there are risks of project cancellations.
- On a positive note, late June and July demand shows signs of a rebound. Margins and earnings should rise going forward thanks to DWSN’s right-sizing of costs.
- DWSN trades at 90% of its tangible book value, at the bottom of its peers and close to a multi-year low.
- DWSN offers a compelling reward/risk opportunity with ~50% upside potential within several years and a target price of $34.