Source Energy Services Ltd (SHLE) AI Stock Analysis

• Market Cap: C$221.32M
• Dividend Yield: N/A
• Average Volume (3M): 27.52K
• Price to Earnings (P/E): 6.1
• Beta (1Y): 1.52
• Revenue Growth: -0.39%
• EPS Growth: -86.01%
• Country: CA
• Employees: 512
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Equipment & Services
• EPS (TTM): 0.16
• Shares Outstanding: 13,080,255
• 10 Day Avg. Volume: 38,581
• 30 Day Avg. Volume: 27,520
• PEG Ratio: 0.02
• Price to Book (P/B): 0.97
• Price to Sales (P/S): 0.29
• P/FCF Ratio: 6.59
• 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$19.00
• Price Target Upside: 12.29% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): 3.37
• Revenue Forecast (FY): C$744.70M

• Rating: 67 Neutral
• Price Target: C$18.00 ▲(6.38% Upside)
• Action: Downgraded Date: 02/28/26
• Date: Action: Downgraded 02/28/26

The score is driven primarily by improving financial results and cash generation, partially offset by above-average leverage and variability in margins/free cash flow. Valuation is supportive due to the low P/E, while technicals are modestly constructive but show near-term consolidation. Earnings call takeaways are balanced: strong operational execution and capital returns, but margin pressure and mostly flat 2026 volume guidance limit upside.

Positive Factors

Integrated proppant & logistics platform

Source’s vertically integrated model — sourcing, processing, terminaling and last‑mile delivery — creates sticky customer relationships and capture of logistics margin. Expanded domestic capacity and terminals lower reliance on external suppliers and freight, improving resilience and competitive positioning over multiple quarters.

Consistent positive cash generation

Sustained operating cash flow and positive free cash flow provide durable funding for maintenance capex, debt service, and shareholder returns. Cash conversion (~1.02x earnings) and year‑end liquidity support operational stability and the ability to invest selectively without immediate capital raises.

Operational capacity & U.S. unit utilization

High utilization in U.S. assets and incremental trucking margins indicate commercially productive capacity that drives reliable revenue streams. Record volumes demonstrate scale; durable utilization in the U.S. reduces idling risk and supports long‑term margin contribution from owned logistics assets.

Negative Factors

Above-average leverage

Material leverage increases financial fixed costs and reduces flexibility to absorb cyclical downturns in completion activity. Elevated debt levels constrain optionality for opportunistic investments or capital returns and raise refinancing and interest‑rate sensitivity risks over the coming quarters.

Per-ton margin pressure and EBITDA weakness

Declining realized prices and per‑ton margins, driven by product and terminal mix and lower‑priced finer sand, reduce margin sustainability and make earnings more sensitive to mix shifts. Lower adjusted EBITDA highlights operating leverage risks and suggests profitability can swing materially with market and mix dynamics.

Rising capex, lease commitments and cash tax headwinds

Higher ongoing capex and increased lease obligations raise fixed costs and tie up cash, while becoming cash‑taxable increases future cash outflows. Together these structural drains can compress free cash flow, limit discretionary spending, and reduce the cushion against operational volatility over the medium term.

Source Energy Services Ltd Business Overview & Revenue Model

Company Description

Source Energy Services Ltd. produces, supplies, and distributes Northern White frac sand used primarily in oil and gas exploration and production in Western Canada and the United States. It also provides storage and logistics services for other bulk oil and gas well completion materials; and develops wellsite mobile sand storage and handling system. The company was founded in 2017 and is headquartered in Calgary, Canada.

How the Company Makes Money

Source Energy Services Ltd generates revenue primarily through the sale of frac sand, a crucial component used in hydraulic fracturing to extract oil and gas. The company's key revenue streams include direct sales to oil and gas companies, long-term contracts with major energy producers, and spot market sales. Additionally, Source Energy Services capitalizes on its strategically located transloading terminals and logistical infrastructure, which enhance its distribution capabilities and reduce delivery times. Partnerships with transportation providers also play a significant role in optimizing its supply chain efficiency, contributing to its revenue generation.

Source Energy Services Ltd Financial Statement Overview

Summary

Improving profitability and solid operating cash flow support the score (TTM net income ~$33.1M; operating cash flow ~$110.6M; free cash flow ~$50.8M). Offsetting this, leverage remains elevated (TTM debt-to-equity ~1.36x) and profitability/free-cash-flow have shown volatility (FCF down ~25% vs prior annual period; margins swung materially across periods).

Income Statement

TTM (Trailing-Twelve-Months) revenue is up meaningfully versus the prior annual period (about $700M vs. $674M), and profitability has improved with net income rising to ~$33.1M from ~$9.5M. Margins are solid for the sector (TTM gross margin ~17.4% and EBITDA margin ~18.0%). The key watch-out is volatility in earnings quality over the cycle: 2023 showed unusually high profitability (net margin ~29%), followed by much lower margins in 2024 and a more normalized level in TTM—suggesting results can swing materially with market conditions and/or non-recurring items.

Balance Sheet

Leverage remains a constraint: TTM debt-to-equity is ~1.36x with total debt of ~$352.7M against equity of ~$208.9M (and debt has risen versus 2024). That said, the balance sheet has repaired substantially from 2021–2022, when equity was very low and leverage appeared extremely elevated, and returns have improved (TTM return on equity ~11.4% vs. ~5.0% in 2024). Overall, the company is in a healthier place than a few years ago, but still carries above-average balance-sheet risk for an equipment/services name.

Cash Flow

Cash generation is positive and supportive: TTM operating cash flow is ~$110.6M and free cash flow is ~$50.8M. However, free cash flow declined versus the prior annual period (down ~25%), and free cash flow covers only about half of net income in TTM (implying working-capital or reinvestment needs are absorbing cash). A positive offset is that operating cash flow roughly matches reported earnings in TTM (coverage ~1.02x), indicating profits are generally converting to cash.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	700.30M	673.95M	569.75M	415.91M	319.86M
Gross Profit	93.86M	127.34M	109.41M	58.15M	39.33M
EBITDA	114.57M	102.69M	223.89M	55.76M	36.89M
Net Income	33.08M	9.51M	167.34M	-2.93M	-56.11M
Balance Sheet
Total Assets	617.13M	598.22M	482.83M	326.90M	266.03M
Cash, Cash Equivalents and Short-Term Investments	19.90M	32.72M	0.00	-68.42M	-38.44M
Total Debt	352.69M	274.87M	221.78M	244.94M	221.47M
Total Liabilities	408.24M	408.35M	313.70M	321.24M	259.50M
Stockholders Equity	208.90M	189.87M	169.13M	5.66M	6.53M
Cash Flow
Free Cash Flow	30.76M	51.06M	28.98M	65.01M	7.49M
Operating Cash Flow	90.61M	94.39M	51.09M	80.17M	14.01M
Investing Cash Flow	-59.35M	-27.06M	-13.20M	-13.90M	-6.00M
Financing Cash Flow	-43.25M	-34.61M	-67.04M	-66.28M	-8.01M

Source Energy Services Ltd Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 16.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SHLE, the sentiment is Neutral. The current price of 16.92 is below the 20-day moving average (MA) of 17.30, above the 50-day MA of 16.61, and above the 200-day MA of 13.93, indicating a neutral trend. The MACD of 0.16 indicates Positive momentum. The RSI at 49.24 is Neutral, neither overbought nor oversold. The STOCH value of 47.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:SHLE.

Source Energy Services Ltd Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TOT	78 Outperform	C$693.52M	9.22	10.51%	2.57%	15.58%	47.55%
CEU	75 Outperform	C$3.56B	12.65	22.50%	1.29%	5.79%	-5.08%
EFX	75 Outperform	C$3.58B	29.07	12.48%	0.74%	5.92%	―
TCW	75 Outperform	C$1.44B	10.23	18.06%	3.57%	9.24%	6.35%
SHLE	67 Neutral	C$221.32M	6.13	11.94%	―	-0.39%	-86.01%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
CFW	65 Neutral	C$525.11M	15.42	3.20%	―	-8.13%	-28.00%

Source Energy Services Ltd Corporate Events

Source Energy Services Posts Record 2025 Sand Volumes but Tighter Margins

Source Energy Services reported record 2025 sand sales volumes of 3.7 million metric tonnes and total revenue of $700.3 million, up 4% year over year, driven by a rebound in customer activity and strong demand despite mid‑year uncertainty. Net income rose to $33.1 million from $9.5 million, while gross margin and Adjusted EBITDA declined due to cost pressures, even as the company completed a Peace River facility expansion, began operating its Taylor transload site and maintained high Sahara fleet utilization, especially in the U.S.

Fourth‑quarter sand volumes climbed 18% versus the prior year to about 907,000 metric tonnes, with revenue gains offset by lower per‑tonne margins and higher depreciation. Source also repurchased 464,800 shares under its Normal Course Issuer Bid, signalling confidence in its balance sheet and long‑term positioning in the frac sand and well site logistics market, as it leverages expanded capacity and infrastructure to support customer completions activity.

The most recent analyst rating on (TSE:SHLE) stock is a Buy with a C$19.00 price target. To see the full list of analyst forecasts on Source Energy Services Ltd stock, see the TSE:SHLE Stock Forecast page.

Source Energy Services Sets Date for Q4 2025 Results and Conference Call

Source Energy Services will release its fourth-quarter 2025 financial results after the close of trading on the Toronto Stock Exchange on February 26, 2026, and will host a conference call the following morning to discuss the results with analysts, investors and media. The company is also providing investors with access to a recorded playback of the call until March 27, 2026, underlining its efforts to maintain transparent communication with stakeholders around its financial performance and operational outlook.

The most recent analyst rating on (TSE:SHLE) stock is a Buy with a C$18.50 price target. To see the full list of analyst forecasts on Source Energy Services Ltd stock, see the TSE:SHLE Stock Forecast page.