Pulse Seismic Inc. (TSX: PSD), is a Candian-based seismic data library company that markets, licenses and involves in the acquisition of two-dimensional (2D) and three-dimensional (3D) seismic data for the energy sector in Western Canada.

Key Highlights

• Improved Credit facility: On December 21, 2021, the company announced that it successfully renewed the credit revolving facility by extending it for additional two years, ending on January 15, 2025. The amount is intact at CAD 25.0 million without altering any of its terms and conditions. One of the noticeable transactions was done in June 2021 when the company repaid its subordinate debt and the remaining amount of the revolver credit was repaid in October 2021. This gives confidence among its lenders regarding the debt repayment activities of the company, which makes further debt contracts easy and negatable and lowers the borrowing costs.

• Earnings updates: On October 27, 2021, the company announced its financial and operating results for the three months and nine months ended on September 30, 2021, stating the Q3FY21 revenues at CAD 8.8 million as compared to CAD 1.8 million in pcp. This rise in sales further boosted the net earnings to CAD 3.2 million ( CAD 0.06 per share both basic & diluted) vs the net loss of CAD 1.9 million (CAD 0.04 per share both basic &diluted) in pcp. Further, the company declared a special dividend of CAD 0.04 per share along with a regular dividend of CAD 0.0125 per share in Q3FY21. All these major improvements in the financials gave a boost to the investors which were very well articulated in the stock prices, taking it to the highs of CAD 2.6 level.

Key Financial Highlights: Q3 FY21-

       Source: Company’s reports

• Profitability metrics: For Q3FY21 the EBITDA margins reported at 83.4% vs the industry median of 14.6% and Net margins of the company for Q3FY21 stood at 35.4% as compared to the industry median of Negative 2.0%. On the leverage front, Debt to Equity, the company managed to strike the balance at 0.10x as compared for the industry median of 0.39x for Q3FY21. On these key valuation front, the company did beat the industry median, garnering the much-needed attention of the investors and its stakeholders for upcoming quarters. 
  

• Strong chart patterns: On the technical front, the stock made a stellar run from the lows of CAD 0.61 in November 2020, to print the highs of CAD 2.60 in November 2021, to eventually come down around the support levels of CAD 2.0 range. The consolidation at these levels could be helpful for the stock to shift its support at the higher base of CAD 1.7  to CAD 1.80 range. The prices as mostly found trading at above 200 DMA, which gives strength to the stock in the medium term.

Stock recommendation

The stock delivered a positive return of 8.13% in the past six months and 66.63% in the past one year. The increase in revenues and most importantly the turnaround in the net earning of the company from net loss to the positive territory, dividends distributions, and the profitability ratios mentioned above, make the stock to be kept in the list. On the technical front, the stock is finding its support before it shows a move towards the North also makes it a notable pattern to be worth waiting for. Considering the above-stated key points, we recommend a “Watch” rating on the stock at the closing price of CAD 2.0, as on February 15, 2022.

1-Year Price Chart (as on February 15, 2022). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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