OYO Geospace Corp (OYOG)

Get on this wagon while you can ,, out performing the market 2009 and more in 2010 to come... the sales and earnings will see year over year increases.

lots o' people rated it

I think this one is being punished by the market and may take some time to rebound. But will definately outperform in the long run.

Earlier this week, OYO Geospace (NASD: OYOG) reported that they have recently received several orders for seismic equipment totaling more than $18 million. These orders span a variety of seismic products including geophone and hydrophone sensors, cables, GSR units, and borehole products. The company also recently announced an order for one of the GSR systems, their new wireless data acquisition system. The company notes that their backlog has increased substantially in recent weeks, with the majority of the orders to be delivered during the fourth quarter of 2009.

Investors in OYO Geospace should be very familiar with the wide variation in earnings from quarter to quarter, which also translates into wide variations in the company's stock price. Prior to 2007, the company was capacity constrained, but had achieved several large sales of its reservoir characterization systems (RCS). Revenue for 2007 totaled $138.1 million, earnings were $19.6 million or $3.23 per share. With record oil prices and the hope of future large sales the stock surged to over $100 per share. Despite expanded capacity, 2008 brought lower revenue and earnings due to the lack of large RCS sales. Revenue in 2008 was $134.5 million and net income was $14.2 million or $2.31 per share.

High oil prices and strong earnings in 2007 and 2008, however, were masking cash flow problems. When oil prices collapsed earlier this year due to the recession, revenue and earnings took a big hit. Accounts receivable and inventory ballooned. The lack of strong cash flow even during the boom years had pushed Oyo's cash balance down to $1.7 million, and caused debt to climb to $25.6 million. The stock, along with the market in general, plummeted to a 52-week low of $9 per share.

Since then, revenue and earnings have remained low but positive. Revenue through the first nine months of their fiscal year totaled $70.2 million, and net income totaled $3.6 million or $0.59 per share. Cash flow has been improved due to collections on accounts receivable and new inventory controls. At the end of their third quarter, they had cash of $1.6 million and total debt of $9 million. $8.3 million of the debt is a long-term real estate mortgage on their expanded facility. Positive news and the market have lifted Oyo to $22 per share.

Oil prices have risen recently to over $70 per barrel. This appears to be a threshold point for many of Oyo's customers. If Oyo's backlog of orders has increased and new sales continue to flow in, improved earnings will be coming soon. Oyo hasn't sold any new RCS systems, but they continue to innovate. Their new GSR systems were gaining traction even in the downturn. Higher oil prices could dramatically boost sales of this new product.

Oyo has the capacity to handle improved demand without additional investment. If earnings improve to 2008 levels and optimism about their new products returns, the stock could return to $50 levels. All of this will be welcome news for investors that have held on to their shares through the recession. It also provides opportunity for those new to the company.

The Energy sector is down but not out. OYOG is one of the top-rated stocks related to seismic data.

Love this stock. Made money with it in my personal account also. They have a niche and can really grow their business if done right.

Good cash flow, good book value, solid financials, good earnings depressed price, growing ebit-da, what's not to like

Oil prices will go up.

Fortune Small Business outperformer.

The majority believe that this stock will outperform in the short run.

Creating a portfolio of stocks with large numbers of insider buys.

It's so close to the minimum market cap, so I'll go ahead and rate it.

oil isn't going away anytime soon - concentrated energy is the core of our entire economy.

Good company; good fundamentals. Going long after the drop.

Another beaten down oil service play. Provides seismic services that can help its clients get more oil out of existing fields. A leader in 4D technology. The recent slump in energy prices will not last - global economic growth will return and that will put continuing upward pressure on energy prices for years to come. Even if prices fall further from here, OYOG's customers must continue to look for oil and gas or find another business model.

More play on energy related companies.

When the value of a hot dog goes down, so do mustard, ketchup and hot dog buns. When the value of a hot dog goes up, so do mustard, ketchup and hot dog buns.

Same story with OYO and energy.

Outperform.

TMFBent

O/U 40% - 90%

Long Term Buy, oil prices will reach new highs by next year