Source Energy Services Ltd (TSE:SHLE)
TSX:SHLE
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Source Energy Services Ltd
(TSX:SHLE)
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Rating:67Neutral
Price Target:
C$16.00
▲(8.47% Upside)
Action:DowngradedDate: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
Cash generation
Strong trailing‑twelve‑month operating cash flow (~$110.6M) and positive free cash flow (~$50.8M) indicate durable cash conversion. This supports reinvestment, debt paydown and buybacks, reduces dependence on external financing and provides a buffer across multi‑quarter completion cycles.
Negative Factors
Above‑average leverage
Debt‑to‑equity around 1.36x leaves the company with elevated leverage relative to peers. Higher debt increases interest and refinancing risk, limits flexibility for opportunistic investments, and amplifies exposure to cyclical drops in completion activity despite balance sheet repair since 2021–22.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Strong trailing‑twelve‑month operating cash flow (~$110.6M) and positive free cash flow (~$50.8M) indicate durable cash conversion. This supports reinvestment, debt paydown and buybacks, reduces dependence on external financing and provides a buffer across multi‑quarter completion cycles.
Read all positive factors
Source Energy Services Ltd (SHLE) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$192.93M
Dividend YieldN/A
Average Volume (3M)27.52K
Price to Earnings (P/E)6.1
Beta (1Y)1.26
Revenue Growth-0.39%
EPS Growth-86.01%
CountryCA
Employees512
SectorEnergy
Sector Strength52
IndustryOil & Gas Equipment & Services
Share Statistics
EPS (TTM)0.16
Shares Outstanding13,080,255
10 Day Avg. Volume38,581
30 Day Avg. Volume27,520
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)0.97
Price to Sales (P/S)0.29
P/FCF Ratio6.59
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$19.00Price Target Upside28.81% Upside
Rating ConsensusHold
Number of Analyst Covering1
EPS Forecast (FY)3.37
Revenue Forecast (FY)C$744.70M
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 bu...
How the Company Makes Money
Source Energy Services makes money by providing proppant supply and logistics services to E&P companies executing hydraulic fracturing programs. Its revenue is primarily generated from: (1) Proppant/frac sand supply and distribution—selling (and/o...
Source Energy Services Ltd Earnings Call Summary
Earnings Call Date:Feb 26, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presented a positive operational and strategic story—record volumes and revenue, significant year-over-year net income improvement, facility expansions, logistics enhancements, a share buyback and debt reduction—while also acknowledging margin pressure from product and terminal mix, incremental commissioning and weather-related costs, higher capex/lease commitments and tax/currency headwinds. Management expects 2026 volumes to be broadly flat with potential back-half upside and continued investment focused on optimizing recently expanded capabilities.Positive Updates
Record Volumes and Revenue
Total 2025 sand sales volume reached a record 3.7 million metric tons, up 5% year-over-year; total revenue for 2025 was $700.3 million, an increase of $26.4 million (≈+3.9%) versus 2024.
Negative Updates
Gross Margin and Adjusted Gross Margin Declines
Reported gross margin for 2025 was $116.6 million, down 8% year-over-year; adjusted gross margin was $159.3 million, down 2% versus 2024, reflecting mix shifts and incremental facility costs.
Read all updates
Q4-2025 Updates
Positive
Negative
Record Volumes and Revenue
Total 2025 sand sales volume reached a record 3.7 million metric tons, up 5% year-over-year; total revenue for 2025 was $700.3 million, an increase of $26.4 million (≈+3.9%) versus 2024.
Read all positive updates
Company Guidance
Source’s forward-looking guidance for 2026 calls for net capital expenditures of $30–$40 million (majority on Peace River optimization and existing terminals), an expectation that full‑year sand volumes will be fairly flat year‑over‑year with steadier quarter‑to‑quarter pacing and potential back‑half upside as LNG Canada ramps, and a focus on growth areas such as expanded chemical transloading; supporting metrics and capacity highlights noted on the call include Peace River expanded to ~1.0 million tons of production, domestic sand capability of ~1.0 million tons/year, completed Taylor terminal and expanded Chetwynd terminal, Sahara unit utilization at 50% in Canada and 100% in the U.S. (Q4), year‑end available liquidity of $59.9 million, and the company being cash‑taxable in the U.S. now (with Canada expected to follow within about a year).Source Energy Services Ltd Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
56
Neutral
Cash Flow
63
Positive
| 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
Negative
14.75
Price Trends
16.48
Negative
15.30
Negative
14.32
Positive
Market Momentum
-0.54
Positive
36.33
Neutral
32.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SHLE, the sentiment is Negative. The current price of 14.75 is below the 20-day moving average (MA) of 15.75, below the 50-day MA of 16.48, and above the 200-day MA of 14.32, indicating a neutral trend. The MACD of -0.54 indicates Positive momentum. The RSI at 36.33 is Neutral, neither overbought nor oversold. The STOCH value of 32.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SHLE.
Source Energy Services Ltd Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | C$800.53M | 7.49 | 12.57% | 2.57% | 15.58% | 47.55% | |
76 Outperform | C$1.55B | 10.23 | 18.06% | 3.57% | 9.24% | 6.35% | |
75 Outperform | C$3.71B | 13.15 | 25.37% | 1.29% | 5.79% | -5.08% | |
75 Outperform | C$3.41B | -9.24 | 6.74% | 0.74% | 5.92% | ― | |
71 Outperform | C$668.14M | 12.37 | 3.06% | ― | -8.13% | -28.00% | |
67 Neutral | C$192.93M | 6.13 | 15.59% | ― | -0.39% | -86.01% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% |
* Energy Sector Average
TSE:SHLE
Source Energy Services Ltd
14.75
7.10
92.81%
TSE:CEU
CES Energy Solutions
17.67
11.70
195.78%
TSE:CFW
Calfrac Well Services
6.69
3.50
109.39%
TSE:EFX
Enerflex
27.99
18.62
198.66%
TSE:TOT
Total Energy Services
21.97
13.34
154.46%
TSE:TCW
Trican Well Service
7.36
3.47
89.20%
Source Energy Services Ltd Corporate Events
Business Operations and StrategyStock BuybackFinancial Disclosures
Source Energy Services Posts Record 2025 Sand Volumes but Tighter Margins
Positive
Feb 27, 2026
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. N...
Business Operations and StrategyFinancial Disclosures
Source Energy Services Sets Date for Q4 2025 Results and Conference Call
Neutral
Jan 27, 2026
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...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.