Bear of the Day: Mitcham (MIND) - Bear of the Day


Estimates have come down substantially after ugly second quarter results, sending Mitcham to a Zacks Rank # 5 (Strong Sell) earlier this month.

About the Company

Mitcham Industries ( MIND ) specializes in leasing and sale of advanced seismic equipment that help oil companies explore for pockets of oil.

The company operates in two segments: equipment leasing and equipment manufacturing. Founded in 1987, the company now has nine locations around the world, providing support and service to geophysical contractors.

Disappointing Second Quarter Results

MIND reported its fiscal 2014 second quarter ended July 31, 2013 financial results on September 4, 2013.

Total revenues for the quarter were $20.9 million down from $23.1 million in the year-ago quarter. The Company reported a net loss of $693,000, or $(0.05) per share, compared to net income of $1.1 million, or $0.08 per diluted share in the comparable quarter of fiscal 2013. 

Apart from seasonal softness in leasing, continued weakness in U.S. land activity; project delays due to permitting difficulties, labor unrest and security issues in Colombia; and a recent decline in marine leasing activity were the major contributors to lower leasing revenues.

The management said that in the next quarter, it would be difficult for them to match leasing revenues a year ago, given the softness and delays in Latin America.

Downwards Revisions

Due to disappointing results and uninspiring guidance, quarterly and annual estimates have been revised sharply downwards in the past few weeks. Zacks consensus estimates for the current quarter and year are now $ (0.01) and $0.69 respectively down from $0.27 and $1.37 per share, 60 days ago.

The Bottom Line

While the company has growth potential in much longer-term given positive outlook for the oil & gas exploration industry, near-term headwinds will keep the stock under pressure.

MIND is currently Zacks Rank # 5 (Strong Sell) stock and it has a recommendation of "Underperform".  Further, Zacks Industry Rank of 205 out of 265 also indicates some weakness in the short- to mid- term. As such investors would like to avoid this stock for the time being.

Better Play?

Investors seeking exposure to the industry could look Dril-quip (DRQ) , a Zacks Rank #1 stock with an outperform recommendation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: DRQ , MIND

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