The Razor's Edge

2-Year Price History

A Word Of Caution

Stocks trading for less than $1 are loosely termed "penny" stocks. EGPI Firecreek, Incorporated (EFIR) is selling for less than $1 per share. While, we stand by our ratings methodology for long term value investors, often times "penny" stocks will be more volatile. Because many "penny" stocks are lightly traded their stock price can fluctuate because of a single large trade. Also, there is generally less analyst coverage of such "penny" stocks and thus less information from which to base our rating.

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

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

EFIR Revenue

As a value investing shop, we are interested in seeing how EFIR's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 6 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 355.41x and the low end of the range at 18.79x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for EFIR of 0.68x is well below its normal historic Price to Sales levels. At a price of $0.17, EFIR is 100% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

EFIR Cash Earnings

Cash (and the ability of a company to generate it) is a pivotal analysis at Ockham Research. With EFIR, we have found that we don't have as many years of positive Cash Earnings as we would like in order to run an analysis. When a company like EFIR has had several years of negative Cash Earnings mixed in with their positive years, it can be difficult to really get a good analysis of their potential. At Ockham, we always advise that Cash is key to any investment, so investors should consider the lack of positive years available as a signal that other types of analysis may need to be more heavily relied upon in EFIR's case.

EFIR 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 EFIR to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. We regard EFIR as neutral in terms of dividends because they have no history of paying a dividend and continue to reinvest that money for growth purposes.