Thursday, February 18, 2021

Energy Services of America (ESOA)
Increasing Price Target to Reflect Multiple Expansion

Energy Services of America Corporation is engaged in providing contracting services for energy-related companies. The company is primarily engaged in the construction, replacement, and repair of natural gas pipelines and storage facilities for utility companies and private natural gas companies. It services the gas, petroleum, power, chemical and automotive industries, and does incidental work such as water and sewer projects. Energy Service’s other services include liquid pipeline construction, pump station construction, production facility construction, water and sewer pipeline installations, various maintenance and repair services and other services related to pipeline construction.

Poe Fratt, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

First fiscal 2021 quarter softer than expected due to seasonality and higher labor costs. 1Q2021 (Dec) was positive from a top line perspective, but profitability compressed due to actions taken to increase work force productivity. Total revenue of $32.0 million increased $6.2 million (~24%), and gross profit of $2.8 million increased $0.45 million (~21%). Adjusted EBITDA of $0.3 million dropped from $0.9 million and EBITDA margin of 1.0% was 230 basis points lower. S,G& A expenses, including added incentive comp, increased $1.0 to $3.6 million and dampened profitability.


Moving FY2021 EBITDA to $9.1 million from $10.8 million to reflect quarterly results and a one-time 401(k) retirement fund adjustment this quarter.  The adjustment is driven by an issue triggered by a change in the third-party administrator of the 401(k) program. In order to remedy the error, the Board decided to make the participants whole using the February 9th closing price of $1.92/share and …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.