Since its IPO, the stock has struggled to gain much traction at all, down about 3% from its IPO price. Rewinding back to its IPO, the pricing was very weak coming in at $12 vs. the $15-$18 expected price range. Of course, the main drag on SOI has been sluggish oil prices. On April 21, just a couple weeks ahead of its IPO, crude oil prices sank below a key $50/barrel price and then continued to dip lower. On its IPO day, crude oil was at $48.86/barrel and prices have slid another 1% to $47.40 barrel.
But, analysts are clearly seeing good value in the stock here, believing that the bad news regarding commodity prices has largely been priced in. The standout initiation is Goldman Sachs initiating with a Buy and $20.50 target, a whopping 77% higher from current prices. Wunderlich (Buy), Credit Suisse (Outperform), and Evercore ISI (Outperform) each have $17 price targets, 47% higher from here. Based on these price targets, it seems fair to say that these firms are very bullish on the risk/reward profile on SOI at its current price.
For some more background on the company, SOI's proppant management systems improve the efficiency of proppant logistics for its customers, which are primarily oil & gas drillers. SOI’s patented systems typically provide 2.5 million pounds of proppant storage capacity in a footprint that is considerably smaller than traditional well site proppant storage equipment. Solaris' six-silo system contains 3x the on-site sand storage capacity in half the space of a conventional SandKing system. SOI’s systems have the ability to unload up to 24 pneumatic proppant trailers simultaneously.
Since commencing operations in April 2014, SOI has grown its fleet from two systems to 37 systems. Its systems are deployed in many of the most active oil & gas basins in the US, including the Permian Basin, the Eagle Ford Shale and the SCOOP/STACK formation. Customers include oil & gas exploration companies such as EOG Resources, Devon Energy and Apache, as well as oilfield service companies, such as ProPetro Services.
It has yet to report quarterly results as a public company. Looking at its 2016 results, revenue came in at $18.16 million, up 28% from $14.2 million in 2015. It has pretty good operating margin, which came in at 15.8% in 2016 vs. an operating loss in 2015. Adjusted EBITDA in 2016 came in at $6.79 million, which computes as a 37.4% margin, up from 11.7% in 2015.