The Razor's Edge

2-Year Price History

A Word Of Caution

Dawson Geophysical Company (DWSN) has experienced a very significant loss in market value recently. Clearly this drop in price will have an impact on the valuation but the recent events that caused the drop may have not been fully factored into our analysis yet. When a stock loses value very quickly it could be a sign that there is a fear of bankruptcy.

Of course, you may proceed to review our research report for this security, but please be aware that our model may not reflect significant factors surrounding this company.

Therefore, (and as always), check additional sources and available information regarding DWSN before making an investment decision.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

DWSN Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, DWSN the high and low end of the Price to Sales per share ratios are 2.00x and 0.91x respectively.

Notice that DWSN's current Price to Sales per share ratio is 0.42x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $19.56, DWSN is 72% below where we would expect to see it. This will beneficially factor into our final analysis of DWSN as it is not often that this stock sinks to these levels.

DWSN Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. DWSN is significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for DWSN, the current level of Cash Earnings compared to its historical levels helps identify where DWSN is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 13.42 and a historical low Cash Earnings per share ratio of 6.33, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for DWSN? From the Ockham perspective, we are looking specifically at DWSN to see if the market is recognizing the huge disparity between DWSN's past stock price to Cash Earnings ratio to today's levels. At a difference of 76% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at DWSN. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

DWSN Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for DWSN to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now DWSN gets a neutral rating for the dividend portion of the model. The company is not currently paying a dividend nor have they in the fairly recent past.