Pason Systems (PSI) AI Stock Analysis

• Market Cap: C$890.42M
• Dividend Yield: 4.64%
• Average Volume (3M): 178.84K
• Price to Earnings (P/E): 7.3
• Beta (1Y): 1.06
• Revenue Growth: 12.14%
• EPS Growth: 26.17%
• Country: CA
• Employees: 678
• Sector: Energy
• Sector Strength: 44
• Industry: Oil & Gas Equipment & Services
• EPS (TTM): 1.53
• Shares Outstanding: 79,430,660
• 10 Day Avg. Volume: 221,929
• 30 Day Avg. Volume: 178,835
• PEG Ratio: 0.28
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.56
• Price to Cash Flow (P/CF): 7.40
• P/FCF Ratio: 15.20
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$17.50
• Price Target Upside: 56.11% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Pason Systems' strong financial performance and attractive valuation with a low P/E ratio and substantial dividend yield suggest a solid investment opportunity. However, technical analysis shows a bearish trend, and earnings call data highlights challenges with declining EBITDA margins and free cash flow. While the company is financially stable with impressive revenue growth, careful attention to cash flow management is necessary.

Positive Factors

Financial Performance

PSI's financial results exceeded expectations due to record performance from the Solar/Energy Storage segment and strength from IWS.

Growth Strategy

The company's capital budget is focused on growth areas such as IWS and mud analyzer rollouts, indicating strategic investment in expansion.

Stock Buyback

The potential to ramp up the buyback program suggests management's confidence in PSI's future performance.

Negative Factors

Market Dynamics

US rig declines pose a challenge, although the company is attempting to offset this with strong revenue per day metrics.

Pason Systems Business Overview & Revenue Model

Company Description

Pason Systems Inc., an energy services and technology company, provides data management systems for drilling rigs in Canada, the United States, and internationally. The company offers Electronic Drilling Recorder, which monitors and records drilling operations around the rig; DataHub for storing data and information collected from the rig for on-demand retrieval; DataLink service provides direct connection interfaces for IT systems and analytics tools; Pason Live for monitoring rig operations in real-time using desktop computers or mobile devices; and daily and end-of-well KPI reports provide visual statistics on rig performance. It also provides Drilling intelligence to suggest drilling parameters, detect disfunction, and send event alerts to onsite personnel and remote engineers in real time; and Drilling automation, a reality across rig platforms. In addition, the company offers Pason Gas Analyzer for real-time gas measurement; a robust system of alarms and sensors to monitor ambient gasses in the atmosphere and in the drilling fluids; and Pason Pit Volume Totalizer to track the volumes, gains, and losses of drilling fluids on location. Further, it provides field support, monitoring, drilling optimization, and office support for data integration. The company serves E&P operators, drilling contractors, and other oilfield service companies. Pason Systems Inc. was founded in 1978 and is headquartered in Calgary, Canada.

How the Company Makes Money

Pason Systems generates revenue primarily through the sale and rental of its data management products and services to oil and gas companies. The company's key revenue streams include equipment rentals, software licensing, and subscription services. These offerings allow clients to access real-time drilling data, analytics, and communication tools that improve operational efficiencies. Additionally, Pason benefits from strategic partnerships with oilfield service providers and technology companies, which help expand its market reach and service offerings. The recurring nature of its subscription and rental models provides a stable and predictable source of income.

Pason Systems Financial Statement Overview

Summary

Pason Systems exhibits strong financial performance with impressive profitability and revenue growth. The company's balance sheet is solid with low leverage and a high equity ratio, although the declining cash position requires careful management. Cash flow generation is adequate, but there is a notable decline in free cash flow. Overall, Pason Systems is financially stable with strong growth prospects, but attention to cash flow management and maintaining profitability is crucial.

Income Statement

Pason Systems demonstrates strong profitability with a gross profit margin of approximately 87.4% and a net profit margin of 29.3% for 2024. The company has shown consistent revenue growth, with a 12.1% increase from 2023 to 2024. However, the absence of EBIT in 2024 due to unspecified reasons could be a concern, despite a solid EBITDA margin of 36.2%. Overall, the company exhibits solid revenue growth and high profitability margins, contributing to a strong income statement score.

Balance Sheet

The balance sheet of Pason Systems is robust, with a low debt-to-equity ratio of 0.03, indicating minimal leverage. The return on equity stands at 24.1%, reflecting efficient use of equity to generate profits. The equity ratio is a healthy 82.1%, showcasing strong capital structure stability. The company maintains a solid cash position, enhancing financial flexibility. While overall leverage is low and equity is strong, the declining cash reserves compared to previous years should be monitored.

Cash Flow

Pason Systems has a positive cash flow situation with a free cash flow of 51.3 million in 2024. However, there is a decrease of approximately 45.5% in free cash flow from the previous year. The operating cash flow to net income ratio is 1.01, indicating that operating cash flow closely aligns with net income, which is a positive indicator of cash flow quality. The free cash flow to net income ratio stands at 0.42, suggesting room for improvement in cash flow generation relative to net income.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
414.13M	369.31M	335.00M	206.69M	156.64M
	Gross Profit
361.95M	203.67M	191.72M	93.33M	44.40M
	EBIT
0.00	160.55M	123.73M	44.62M	11.25M
	EBITDA
149.94M	161.50M	160.26M	80.19M	55.74M
	Net Income Common Stockholders
121.50M	97.54M	107.62M	33.84M	6.57M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
80.78M	171.77M	172.43M	158.28M	149.28M
	Total Assets
614.61M	487.88M	469.93M	379.94M	361.42M
	Total Debt
15.42M	12.99M	5.53M	7.33M	6.17M
	Net Debt
-61.78M	-158.78M	-126.53M	-150.95M	-143.11M
	Total Liabilities
118.94M	86.92M	88.97M	72.16M	56.13M
	Stockholders Equity
504.41M	408.06M	386.48M	311.48M	307.06M
Cash Flow		Free Cash Flow
51.26M	94.12M	69.91M	54.14M	53.42M
	Operating Cash Flow
123.19M	135.03M	104.41M	65.06M	58.58M
	Investing Cash Flow
-155.58M	-13.06M	-92.23M	-27.08M	-12.28M
	Financing Cash Flow
-63.37M	-65.82M	-42.06M	-27.05M	-52.20M

Pason Systems Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 11.21
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PSI, the sentiment is Negative. The current price of 11.21 is below the 20-day moving average (MA) of 12.60, below the 50-day MA of 12.76, and below the 200-day MA of 13.95, indicating a bearish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 56.59 is Neutral, neither overbought nor oversold. The STOCH value of 46.17 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:PSI.

Pason Systems Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PSI	76 Outperform	C$890.42M	7.34	26.63%	4.64%	12.14%	26.17%
TCW	75 Outperform	$761.02M	7.37	21.89%	4.54%	0.84%	-1.74%
CEU	70 Outperform	$1.33B	7.17	26.23%	2.14%	8.79%	31.76%
PD	67 Neutral	$778.99M	7.55	6.90%	―	-1.83%	-62.53%
Sector *	57 Neutral	$7.56B	4.34	-4.83%	6.50%	-0.19%	-64.60%
ESI	53 Neutral	C$346.18M	14.37	-1.55%	―	-6.00%	-150.20%
WRG	48 Neutral	C$71.07M	―	-2.44%	―	-4.44%	0.75%

Pason Systems Corporate Events

Pason Systems to Announce Q1 2025 Results and Hold AGM

Pason Systems Inc. announced it will hold its annual general meeting and release its first quarter results for 2025 on May 1. The company will also host a conference call on May 2 to discuss these results, providing an opportunity for stakeholders to gain insights into its financial performance and strategic direction.

Pason Systems Reports Strong Q4 2024 Results and Declares Dividend

Pason Systems Inc. reported its fourth quarter and annual financial results for 2024, highlighting a 15% increase in total revenue compared to the previous year. The company also declared a quarterly dividend, reflecting its commitment to returning value to shareholders. Despite challenges in international drilling revenue, Pason saw growth in its solar and energy storage segment, indicating a strategic diversification of its revenue streams. The company’s net income nearly doubled in the fourth quarter, showcasing strong operational performance and financial health.