Solaris Oilfield Infrastructure (SOI) Update - Nov 12

Solaris Oilfield Infrastructure (SOI) Update - Nov 12

Postby dan_s » Fri Nov 12, 2021 3:56 pm

SOI was trading at $7.64 at the time of this post. I've updated my forecast and I am increasing my valuation by $1 to $12.
SOI has a strong balance sheet and pays a dividend of $0.105/quarter for annualized yield of ~5.5%

Solaris has gained market share during the pandemic and it does appear that demand for their services is picking up. Their revenues increased from $28.7 million in Q1 to $36.2 million in Q2 and then to $49.4 million in Q3. The trend should continue as upstream companies gradually increase their drilling budgets.

Pre-pandemic in 2019 Solaris had revenues of $241.7 million and operating cash flow of $139.3 million. As they gain price power in 2022, their operating cash flow should double and so should their dividends.

11/2/2021: Stifel analyst Stephen Gengaro lowered the price target on Solaris Oilfield Infrastructure (NYSE: SOI) to $12.00 (from $13.00) while maintaining a Buy rating. The analyst commented, "Solaris' 3Q21 revenue EBITDA improved sequentially and exceeded our projections, driven by higher deployed systems. We expect about flat 4Q21 activity and a solid improvement in 2022 with U.S. upstream spending likely rising 20%+. We are expecting solid 2022-23 growth, but we are lowering our 2022 EBITDA forecast based on a 26% rise in fully utilized systems. Strong traction from new products and potential share gain could lead to upside to our projections. We are trimming our target price to $12 from $13."
Dan Steffens
Energy Prospectus Group
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