TSX:PSK

Stock Analysis Report

PrairieSky Royalty

Executive Summary

PrairieSky Royalty Ltd. holds crude oil and natural gas royalty interests in Alberta, Saskatchewan, British Columbia, and Manitoba of Canada.

Rewards

Trading at 36.9% below its fair value

Risk Analysis

Earnings are forecast to decline by an average of -11.3% per year for the next 3 years

Dividend of 5.65% is not well covered by earnings or forecast to be in the next 3 years

Highly volatile share price over past 3 months



Snowflake Analysis

Mediocre balance sheet and slightly overvalued.

Share Price & News

How has PrairieSky Royalty's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PSK's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.7%

PSK

-1.5%

CA Oil and Gas

-1.3%

CA Market


1 Year Return

-17.9%

PSK

-1.3%

CA Oil and Gas

7.7%

CA Market

Return vs Industry: PSK underperformed the Canadian Oil and Gas industry which returned -1.3% over the past year.

Return vs Market: PSK underperformed the Canadian Market which returned 7.7% over the past year.


Shareholder returns

PSKIndustryMarket
7 Day0.7%-1.5%-1.3%
30 Day2.6%0.4%0.7%
90 Day-21.3%2.8%1.0%
1 Year-14.1%-17.9%3.4%-1.3%11.3%7.7%
3 Year-53.9%-58.3%-14.0%-22.8%15.5%5.1%
5 Year-43.3%-52.7%-3.0%-18.3%38.4%18.0%

Price Volatility Vs. Market

How volatile is PrairieSky Royalty's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is PrairieSky Royalty undervalued compared to its fair value and its price relative to the market?

36.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PSK (CA$13.8) is trading below our estimate of fair value (CA$21.87)

Significantly Below Fair Value: PSK is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: PSK is poor value based on its PE Ratio (34.7x) compared to the Oil and Gas industry average (10x).

PE vs Market: PSK is poor value based on its PE Ratio (34.7x) compared to the Canadian market (15x).


Price to Earnings Growth Ratio

PEG Ratio: PSK's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: PSK is overvalued based on its PB Ratio (1.3x) compared to the CA Oil and Gas industry average (0.6x).


Next Steps

Future Growth

How is PrairieSky Royalty forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

-11.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PSK's earnings are forecast to decline over the next 3 years (-11.3% per year).

Earnings vs Market: PSK's earnings are forecast to decline over the next 3 years (-11.3% per year).

High Growth Earnings: PSK's earnings are forecast to decline over the next 3 years.

Revenue vs Market: PSK's revenue is expected to decline over the next 3 years (-4.4% per year).

High Growth Revenue: PSK's revenue is forecast to decline over the next 3 years (-4.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PSK's Return on Equity is forecast to be low in 3 years time (3%).


Next Steps

Past Performance

How has PrairieSky Royalty performed over the past 5 years?

-16.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PSK has high quality earnings.

Growing Profit Margin: PSK's current net profit margins (41.3%) are higher than last year (41.2%).


Past Earnings Growth Analysis

Earnings Trend: PSK's earnings have declined by -16.3% per year over the past 5 years.

Accelerating Growth: PSK's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: PSK had negative earnings growth (-17.8%) over the past year, making it difficult to compare to the Oil and Gas industry average (16.5%).


Return on Equity

High ROE: PSK's Return on Equity (3.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is PrairieSky Royalty's financial position?


Financial Position Analysis

Short Term Liabilities: PSK's short term assets (CA$30.7M) do not cover its short term liabilities (CA$38.1M).

Long Term Liabilities: PSK's short term assets (CA$30.7M) do not cover its long term liabilities (CA$193.8M).


Debt to Equity History and Analysis

Debt Level: PSK's debt to equity ratio (0.2%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if PSK's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: PSK's debt is well covered by operating cash flow (4520.4%).

Interest Coverage: PSK's interest payments on its debt are well covered by EBIT (58.1x coverage).


Balance Sheet

Inventory Level: PSK has a high level of physical assets or inventory.

Debt Coverage by Assets: PSK's debt is covered by short term assets (assets are 6.3x debt).


Next Steps

Dividend

What is PrairieSky Royalty's current dividend yield, its reliability and sustainability?

5.65%

Current Dividend Yield


Dividend Yield vs Market

company5.7%marketbottom25%2.0%markettop25%5.7%industryaverage4.7%forecastin3Years5.7%

Current dividend yield vs market & industry

Notable Dividend: PSK's dividend (5.65%) is higher than the bottom 25% of dividend payers in the Canadian market (2.03%).

High Dividend: PSK's dividend (5.65%) is in the top 25% of dividend payers in the Canadian market (5.74%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, PSK has been paying a dividend for less than 10 years.

Growing Dividend: PSK has only been paying a dividend for 5 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (195.9%), PSK's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: PSK's dividends in 3 years are not forecast to be well covered by earnings (201.3% payout ratio).


Next Steps

Management

What is the CEO of PrairieSky Royalty's salary, the management and board of directors tenure and is there insider trading?

4.8yrs

Average management tenure


CEO

Andrew Phillips (41yo)

5.7yrs

Tenure

CA$4,291,000

Compensation

Mr. Andrew M. Phillips has been the Chief Executive Officer and President at PrairieSky Royalty Ltd. since April 11, 2014. Mr. Phillips served as the Chief Executive Officer and President of Home Quarter R ...


CEO Compensation Analysis

Compensation vs Market: Andrew's total compensation ($USD3.25M) is above average for companies of similar size in the Canadian market ($USD2.15M).

Compensation vs Earnings: Andrew's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.8yrs

Average Tenure

Experienced Management: PSK's management team is considered experienced (4.8 years average tenure).


Board Age and Tenure

5.0yrs

Average Tenure

59yo

Average Age

Experienced Board: PSK's board of directors are considered experienced (5 years average tenure).


Insider Trading

Insider Buying: PSK insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyCA$263,73407 Nov 19
Robert Robotti
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares20,000
Max PriceCA$13.19
BuyCA$29,95305 Nov 19
P. Gavan
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,200
Max PriceCA$13.62
BuyCA$130,60001 Nov 19
James Estey
EntityIndividual
Role
Chairman of the Board
Independent Chairman of the Board
Shares10,000
Max PriceCA$13.06
BuyCA$32,50030 Oct 19
Pamela Kazeil
EntityIndividual
Role
Chief Financial Officer
VP of Finance & CFO
Shares2,500
Max PriceCA$13.00
BuyCA$130,10030 Oct 19
James Estey
EntityIndividual
Role
Chairman of the Board
Independent Chairman of the Board
Shares10,000
Max PriceCA$13.01
BuyCA$58,42730 Oct 19
Cameron Proctor
EntityIndividual
Role
Chief Operating Officer
COO & Corporate Secretary
Shares4,500
Max PriceCA$12.99
BuyCA$132,40030 Oct 19
Andrew Phillips
EntityIndividual
Role
Chief Executive Officer
President
Shares10,000
Max PriceCA$13.24
BuyCA$74,62011 Mar 19
Andrew Phillips
EntityIndividual
Role
Chief Executive Officer
President
Shares3,980
Max PriceCA$18.76
BuyCA$20,35028 Feb 19
Andrew Phillips
EntityIndividual
Role
Chief Executive Officer
President
Shares1,000
Max PriceCA$20.35
SellCA$20,35028 Feb 19
Andrew Phillips
EntityIndividual
Role
Chief Executive Officer
President
Shares1,000
Max PriceCA$20.35

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Pamela Kazeil

    VP of Finance & CFO

    • Tenure: 4.5yrs
    • Compensation: CA$1.65m
  • Cam Proctor

    COO & Corporate Secretary

    • Tenure: 4.8yrs
    • Compensation: CA$2.71m
  • Andrew Phillips (41yo)

    President

    • Tenure: 5.7yrs
    • Compensation: CA$4.29m
  • Amber Vrataric

    Controller

    • Tenure: 0yrs
    • Compensation: CA$487.30k

Board Members

  • Grant Zawalsky (59yo)

    Independent Director

    • Tenure: 5yrs
    • Compensation: CA$160.00k
  • P. Gavan (59yo)

    Independent Director

    • Tenure: 0.6yrs
  • Sheldon Steeves (65yo)

    Independent Director

    • Tenure: 5.7yrs
    • Compensation: CA$170.00k
  • Myron Stadnyk (56yo)

    Independent Director

    • Tenure: 1.5yrs
    • Compensation: CA$85.90k
  • Bob Robotti (65yo)

    Independent Director

    • Tenure: 0.2yrs
  • Margaret McKenzie (57yo)

    Independent Director

    • Tenure: 5yrs
    • Compensation: CA$175.00k
  • Jim Estey (66yo)

    Independent Chairman of the Board

    • Tenure: 5.7yrs
    • Compensation: CA$310.00k
  • Andrew Phillips (41yo)

    President

    • Tenure: 5.7yrs
    • Compensation: CA$4.29m

Company Information

PrairieSky Royalty Ltd.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: PrairieSky Royalty Ltd.
  • Ticker: PSK
  • Exchange: TSX
  • Founded: 2013
  • Industry: Oil and Gas Exploration and Production
  • Sector: Energy
  • Market Cap: CA$3.114b
  • Shares outstanding: 233.27m
  • Website: https://www.prairiesky.com

Number of Employees


Location

  • PrairieSky Royalty Ltd.
  • 350 - 7th Avenue SW
  • Suite 1700
  • Calgary
  • Alberta
  • T2P 3N9
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
PSKTSX (The Toronto Stock Exchange)YesCommon SharesCACADMay 2014
7PSDB (Deutsche Boerse AG)YesCommon SharesDEEURMay 2014
PREK.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDMay 2014

Biography

PrairieSky Royalty Ltd. holds crude oil and natural gas royalty interests in Alberta, Saskatchewan, British Columbia, and Manitoba of Canada. It hold interests in approximately 7.8 million acres with petro ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/06 00:31
End of Day Share Price2019/12/05 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.