Source Energy Services Ltd (SHLE) AI Stock Analysis

• Market Cap: C$218.31M
• Dividend Yield: N/A
• Average Volume (3M): 27.52K
• Price to Earnings (P/E): 8.9
• Beta (1Y): 1.74
• Revenue Growth: -0.39%
• EPS Growth: -86.01%
• Country: CA
• Employees: 512
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Equipment & Services
• EPS (TTM): -0.46
• Shares Outstanding: 13,135,155
• 10 Day Avg. Volume: 38,581
• 30 Day Avg. Volume: 27,520
• PEG Ratio: -0.25
• Price to Book (P/B): 1.16
• Price to Sales (P/S): 0.33
• P/FCF Ratio: 4.31
• 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: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: C$19.00 ▲(24.51% Upside)

The score is driven primarily by improving financial performance led by strong operating cash flow/free cash flow, tempered by leverage and soft recent revenue. Technicals are supportive with price above major moving averages and positive momentum. Valuation is favorable on a low P/E, while the latest earnings call was cautious due to sharp Q3 volume/EBITDA declines despite management expecting a Q4 rebound and longer-term LNG-linked growth.

Positive Factors

Strong cash generation

Sustainable operating cash flow (~$131M TTM) and positive free cash flow (~$68M) give Source durable internal funding for maintenance capex, expansion and debt reduction. Consistent cash conversion cushions the business through cyclical E&P spending swings.

Capacity and infrastructure expansion

Completion of Peace River capacity and a fully operational Taylor terminal materially increases Source’s logistical footprint and processing capacity. Higher owned capacity strengthens competitive positioning to capture basin share and LNG-driven proppant demand over coming years.

Improving balance sheet metrics

Rebuilt equity and an improved debt-to-equity position alongside higher ROE (~11% TTM) signal stronger financial resilience versus prior years. This gradual repair increases flexibility for capex, M&A or further deleveraging during lower-activity periods.

Negative Factors

Sharp volume and revenue decline

A 31% drop in sand volumes and a $42M revenue decline in Q3 highlight the company’s exposure to volatile completion activity. Persistent top-line swings undermine revenue predictability and complicate long‑term planning for capacity utilization and fixed-cost absorption.

Material EBITDA sensitivity to activity

A large sequential and year-over-year EBITDA drop demonstrates operating leverage in the model: lower volumes rapidly compress margins. This sensitivity limits margin sustainability across cycles and reduces durable free cash generation in prolonged downturns.

Leverage and cash conversion constraints

Elevated leverage combined with FCF that is roughly half of net income reduces financial flexibility. Working-capital swings and capex can quickly erode surplus cash, leaving less buffer for downturns or large strategic investments without external financing.

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 fundamentals with strong TTM operating cash flow (~$131M) and positive free cash flow (~$68M). Offsets include declining TTM revenue (~-7.8%), historically volatile profitability, and still-elevated leverage (TTM debt-to-equity ~1.36).

Income Statement

TTM (Trailing-Twelve-Months) results show solid profitability (about 17% gross margin, ~18% EBITDA margin, and ~3.5% net margin) with positive net income. However, revenue is down ~7.8% in TTM, and profitability has been volatile across the cycle (large loss in 2020, losses in 2021–2022, an unusually strong 2023, then much lower net margin in 2024–TTM). Overall: improved from prior down-cycle levels, but earnings quality and top-line momentum are not consistently strong.

Balance Sheet

Leverage remains elevated but more manageable than in earlier years: TTM debt-to-equity is ~1.36 (improved vs. 2024 at ~1.45), and equity has rebuilt meaningfully versus 2021–2022 when equity was extremely low and leverage spiked. Returns on equity improved to ~11% in TTM (up from ~5% in 2024), but the balance sheet still carries meaningful debt relative to equity, leaving less room for error if industry conditions soften.

Cash Flow

Cash generation is a relative strength. TTM operating cash flow is strong (~$131M) with positive free cash flow (~$68M) and modest free cash flow growth (~3.7%). Cash conversion also improved, with operating cash flow roughly covering net income in TTM (coverage ~1.02). A key watchout is that free cash flow is only about half of net income in TTM, suggesting working-capital swings and/or capital spending can meaningfully impact how much profit turns into true surplus cash.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	680.75M	673.95M	569.75M	415.91M	319.86M	249.88M
Gross Profit	118.55M	127.34M	109.41M	58.15M	39.33M	24.66M
EBITDA	122.73M	102.69M	223.89M	55.76M	36.89M	-78.38M
Net Income	23.73M	9.51M	167.34M	-2.93M	-56.11M	-185.47M
Balance Sheet
Total Assets	597.89M	598.22M	482.83M	326.90M	266.03M	266.26M
Cash, Cash Equivalents and Short-Term Investments	30.39M	32.72M	0.00	-68.42M	-38.44M	-42.33M
Total Debt	285.28M	274.87M	221.78M	244.94M	221.47M	189.61M
Total Liabilities	387.55M	408.35M	313.70M	321.24M	259.50M	233.57M
Stockholders Equity	210.34M	189.87M	169.13M	5.66M	6.53M	32.69M
Cash Flow
Free Cash Flow	67.94M	51.06M	28.98M	65.01M	7.49M	35.69M
Operating Cash Flow	130.93M	94.39M	51.09M	80.17M	14.01M	39.37M
Investing Cash Flow	-58.84M	-27.06M	-13.20M	-13.90M	-6.00M	-4.96M
Financing Cash Flow	-42.04M	-34.61M	-67.04M	-66.28M	-8.01M	-34.41M

Source Energy Services Ltd Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 15.26
• 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 Positive. The current price of 15.26 is below the 20-day moving average (MA) of 16.51, above the 50-day MA of 15.20, and above the 200-day MA of 13.22, indicating a bullish trend. The MACD of 0.37 indicates Positive momentum. The RSI at 55.65 is Neutral, neither overbought nor oversold. The STOCH value of 46.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
TCW	78 Outperform	C$1.55B	12.80	18.06%	3.57%	9.24%	6.35%
TOT	78 Outperform	C$616.17M	10.28	10.51%	2.57%	15.58%	47.55%
CEU	75 Outperform	C$3.13B	18.54	22.50%	1.29%	5.79%	-5.08%
EFX	75 Outperform	C$2.89B	15.44	12.48%	0.74%	5.92%	―
SHLE	70 Outperform	C$218.31M	8.91	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$500.44M	22.25	3.20%	―	-8.13%	-28.00%

Source Energy Services Ltd Corporate Events

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.

Source Energy Services Faces Revenue Decline Amidst Market Challenges in Q3 2025

Source Energy Services Ltd. reported a challenging third quarter in 2025 due to lower activity levels and weak commodity prices, particularly affecting natural gas. This resulted in a significant decrease in sand sales volumes and total revenue, which fell by 32% compared to the same period last year. Despite these challenges, the company managed to secure sand processing assets for future expansion and reduced its term loan balance, indicating strategic moves to strengthen its market position.

The most recent analyst rating on (TSE:SHLE) stock is a Hold with a C$15.00 price target. To see the full list of analyst forecasts on Source Energy Services Ltd stock, see the TSE:SHLE Stock Forecast page.