Superior Stock Story

SDPI

Stock

USD 0.94 0.09 8.74%

Macroaxis Story

Superior Drilling is scheduled to announce its earnings today. As many passive investors are finally getting excited about energy space, Superior Drilling Products could be a good starting point. Here we also measure the ability of Superior Drilling to meet its long-term debt obligations, such as interest payments on debt, the final principal payment on the debt, and any other fixed obligations like lease payments.

Published over three months ago

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Does Superior Drilling (AMEX:SDPI) has enough cash to last in June?

This firm currently holds 6.78 M in liabilities with Debt to Equity (D/E) ratio of 1.89, which is about average as compared to similar companies. The company has a current ratio of 1.31, which is within standard range for the sector. Debt can assist Superior Drilling until it has trouble settling it off, either with new capital or with free cash flow. So, Superior Drilling's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Superior Drilling sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Superior to invest in growth at high rates of return. When we think about Superior Drilling's use of debt, we should always consider it together with cash and equity.

Superior Drilling financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Superior Drilling, including all of Superior Drilling's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Superior Drilling assets, the company is considered highly leveraged. Understanding the composition and structure of overall Superior Drilling debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.

Please read more on our technical analysis page.

Watch out for price decline

Please consider monitoring Superior Drilling on a daily basis if you are holding a position in it. Superior Drilling is trading at a penny-stock level, and the possibility of delisting is much higher compared to other equities. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Superior Drilling stock to be traded above the $1 level to remain listed. If Superior Drilling stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Superior Drilling's Liquidity

Superior Drilling financial leverage refers to using borrowed capital as a funding source to finance Superior Drilling Products ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Superior Drilling financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Superior Drilling's total debt and its cash.

How does Superior utilize its cash?

To perform a cash flow analysis of Superior Drilling, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Superior Drilling is receiving and how much cash it distributes out in a given period. The Superior Drilling cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Acquisition by Robert Iversen of 980 shares of Superior Drilling subject to Rule 16b-3

Legal trades by Superior Drilling insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:

Superior insider trading alert for grant of restricted stock unit by Robert Iversen, the corporate stakeholder, on 11th of August 2021. This event was filed by Superior Drilling Product with SEC on 2021-08-11. Statement of changes in beneficial ownership - SEC Form 4 [view details]

Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Going after Superior Financials

The current price rise of Superior Drilling created some momentum for stockholders as it was traded today as low as 0.95 and as high as 1.0 per share. The company directors and management may have good odds in positioning the company resources to exploit market volatility in June. The stock standard deviation of daily returns for 90 days investing horizon is currently 7.06. The very high volatility is mostly attributed to the latest market swings and not very good earnings reports from some of the Superior Drilling partners.

Is Superior Drilling drop permanent?

The treynor ratio is down to -0.67 as of today. Superior Drilling Products is displaying above-average volatility over the selected time horizon. Investors should scrutinize Superior Drilling Products independently to ensure intended market timing strategies are aligned with expectations about Superior Drilling volatility. Superior Drilling Products is a potential penny stock. Although Superior Drilling may be in fact a good instrument to invest, many penny stocks are speculative in nature and are subject to artificial price hype. Please make sure you totally understand the upside potential and downside risk of investing in Superior Drilling Products. We encourage investors to look for the signals such us email spams, message board hypes, claims of breakthroughs, volume upswings, sudden news releases, promotions that are not reported, or demotions released before SEC filings. Please also check biographies and work history of current and past company officers before investing in high volatility instruments, penny stocks, or equities with microcap classification. You can indeed make money on Superior instrument if you perfectly time your entry and exit. However, remember that penny stocks that have been the subject of an artificial hype usually unable to maintain its increased share price for more than just a few days. The price of a promoted high volatility instrument will almost always revert back. The only way to increase shareholder value is through legitimate performance backed up by solid fundamentals.

Our Final Takeaway

While few other entities in the oil & gas equipment & services industry are either recovering or due for a correction, Superior Drilling may not be performing as strong as the other in terms of long-term growth potentials. Taking everything into account, as of the 13th of May 2022, we believe Superior Drilling is currently undervalued. It barely shadows the market and projects below average chance of distress in the next two years. However, our overall 90 days buy-sell recommendation on the company is Strong Sell.

Editorial Staff

Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time base at the beginning of the pandemic and eventually acquired a real test for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Superior Drilling Products. Please refer to our Terms of Use for any information regarding our disclosure principles.

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