Rig utilisation and revenue/m are both down marginally from what I expected, but pleasingly the NPAT loss is slimmer (I was expecting -0.6m, vs -0.4m actual).
With a clearer view of utilisation and some useful commentary around the timing of new contracts commencing - I am now anticipating only a breakeven NPAT result for the FY result. I know that MikeM will hate me for saying that - but I really don't see how SWK can achieve anything even remotely close to 3cps.
I am quite pleased that cash expenditure on both capex and investments are continuing. Therefore there is some headroom to move if things get really tight.
In terms of value, 7assuming an EBITDA multiple of 4x and a neutral sentiment in the 1H report, I think the stock is fairly priced at these levels. I plan to keep watching for a dip then jump in.
As an aside, the dip may be provided by a (further) deterioration in BLY. That is one stock I would NOT want to be holding at present. EV is circa $700m, with Market Cap of $160m. Doesn't take much instability to wipe the stock price to zero... and as they are cutting so much of their company to the bone, it looks like a long road to recovery.
Meanwhile, I have a feeling SWK will capitalise on their competitor's weakness.
SWK Price at posting:
27.0¢ Sentiment: LT Buy Disclosure: Not Held
