Boots & Coots: Taking Some Money Off The Table

Boots & Coots: Taking Some Money Off The Table post image

Boots & Coots, Inc. (WEL – $2.00) announced fourth quarter and year end results earlier this week. Both its revenues and earnings for the quarter and full year were down compared with 2008. Although the Company’s numbers are worse than those of last year, the stock is up 75% since our buy recommendation a little over a year ago.

Despite the much improved economic outlook versus early 2009, we feel the stock is currently overvalued and are therefore taking some money off the table by selling half our position.

Results

Revenues, for the quarter ended December 31, 2009, were down $2.9 million to $53.0 million. And net income for the quarter was $2.5 million or $0.03 per diluted share, compared with $5.1 million or $0.07 per diluted share for the 2008 fourth quarter.

For the year ended December 31, 2009, Boots & Coots reported revenues of $195.1 million compared to $209.2 million for 2008. Net income for the 2009 period was $6.0 million or $0.08 per diluted share, compared to $21.8 million or $0.28 per diluted share for the prior year.

To our surprise, because let’s face it, the results aren’t bad but sure aren’t great either, the stock price moved up and closed at $2 on Friday. This is up more than 75% compared with our buy recommendation a little over a year ago.

Analysis

In January of 2009, we recommended WEL because it was an oil related Company that had just released excellent third quarter and nine months results, management indicated at the time they weren’t impacted by the economic conditions and the stock was trading at a P/E of 3.93.

It’s obvious the situation doesn’t look as good anymore as it did 12 months ago. We even feel Boots & Coots’ stock may be a little overvalued at this moment, for example the current P/E is 25! So after analyzing the situation, we have decided to sell half our position.

We don’t sell the entire position at this moment, because we believe the economy is improving, oil prices will probably move up along with the economy which, in its turn, will mean more business for WEL. So we still like the Company and the industry it’s in, it’s just that we believe the stock is overvalued at present.

What’s your opinion? Are we selling too soon? Will the stock continue to go up? And how about oil prices?

0 comments… add one

Leave a Comment