HI there,
Dan just answered a question on this last week - here was his answer:
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This is a huge, huge contrarian play. One that will likely require a lot of things to go right for them to get back on track.
This company's revenue has literally collapsed year over year due to the pandemic, falling more than 75%. And, the overall future is uncertain, coming straight from the company themselves:
"As such, overall market conditions have been uncertain and are anticipated to remain uncertain for the foreseeable future. It is likely that companies will continue to reduce or carefully manage spending for capital projects and operations where possible until some sort of market stability has returned."
I get somewhat uncomfortable when the vast majority of a company's quarterly highlights is centered around cash preservation and the amount of capital they have access to via credit facilities.
This company really needs economic activity to pick up again. Which, may not happen for another year if not more in the sector.
I'm generally curious as to how the company performs in the fourth quarter. That will be a big indicator of where this company could be headed in 2021 and 2022.
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So what we have here is a company that still has plenty of uncertainty. As Dan mentioned, it may still be a while before we see a meaningful uptick in economic activity and as such, may take a while for the company to rebound.
An investment on the company here, is a certainly a high risk - high reward proposition. Depending on one's risk profile, one may want to wait a quarter or two to see how things play out. Although one may miss some short term gains, it would allow the investor to get a better indication of future outlook.
Mat