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DMC Global Can Be A Boom In The Long Run

Dec. 07, 2018 7:49 AM ETDMC Global Inc. (BOOM)
Badsha Chowdhury profile picture
Badsha Chowdhury


  • BOOM has a robust suite of energy and industrial products.
  • DynaEnergetics segment gross margin can improve in Q4.
  • BOOM’s new facility and product lines can improve the top line in the long run.
  • Completions activity slowdown can pull back BOOM in Q4.

DMC Global’s steady run

DMC Global (NASDAQ:BOOM), through its NobelClad and DynaEnergetics segments, serves the energy, industrial and infrastructure markets. Its products are used in perforation of oil and gas wells, and maintenance and retrofit projects at chemical processing, petrochemical processing, oil refining, and aluminum smelting facilities. BOOM’s new facility in Texas will expand the production capacity of its well perforating system. Plus, it is installing two new automated shaped-charge production lines that can triple the U.S. production capacity of advanced perforating charges. While the crude oil price weakness and industry pricing pressure can keep its operating margin down, BOOM has strong drivers to perform robustly over the medium-to-long term. In 2018 so far, DMC Global’s stock price has gone up by 42%, while VanEck Vectors Oil Services ETF (OIH) declined by nearly 31%. OIH represents the oilfield equipment & services (or OFS) industry.

DynaEnergetics keeps going despite headwinds

DMC Global’s DynaEnergetics segment offers perforating products used in drilling oil and gas wells. The products are used in are used in the well completion process, which in turn is highly dependent on oil and gas E&P activity. Exploration activity over the last several years has led to increasingly complex well completion operations. This has increased the demand for advanced perforating products. In Q3, revenues from DynaEnergetics segment increased by a whopping 88% over Q3 2017. When you look at it in comparison to the Q2 2018 revenues, it still grew by 12.6%. This is no mean achievement. As I have discussed in many of my articles on the OFS companies engaged in providing completions services to the upstream operators, the recent completion activity slowdown have caught many unguarded in Q3. According to the EIA’s Drilling Productivity Report, the number of completed wells in the key U.S. shales showed tremendous growth at the beginning of 2018. But since mid-2018, the rate of

This article was written by

Badsha Chowdhury profile picture
I have more than 14 years of experience in analyzing and writing on stocks. I write on both long and short sides in an unbiased manner. I have been covering the energy sectors for the past 7 years, with the primary focus on the oilfield equipment services sector. I also cover the Industrial Supply industry. I occasionally co-author with Seeking Alpha contributor Thomas Prescott.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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