Fairmount Santrol versus peers and industry
Fairmount Santrol Holdings (FMSA) provides sand-based proppant solutions to the energy upstream sector. It had a strong run in the stock market in 2016. On December 7, 2016, FMSA was trading at $9.27. This price was ~281% higher than its price at the beginning of the year.
The VanEck Vectors Oil Services ETF (OIH), an ETF tracking an index of 25 oilfield equipment and services (or OFS) companies, has risen 27% since the beginning of 2016. Halliburton (HAL), FMSA’s larger market cap OFS peer, has risen 59% during the same period.
The entire OFS industry has been negatively affected by the energy price crash since June 2014. However, West Texas Intermediate (or WTI) crude oil’s price has recovered ~40% year-to-date. Read the latest on crude oil prices in our series Key Insights into Crude Oil Market: How Will Prices Move?
What does Fairmount Santrol’s stock price movement tell us?
Fairmount Santrol’s share price trended upward from January to early November 2016. Although FMSA’s net income in the past four quarters has been persistently weak, its revenue has remained steady. In fact, its revenue improved in 3Q16 compared to 2Q16.
Fairmount Santrol’s moving averages
On December 5, Fairmount Santrol’s stock price was at a 6.5% premium to its 50-day moving average. It was trading 48% above its 200-day moving average.
Moving averages exhibit a smoother trend following a stock’s price movements. A 50-day moving average is a short-term moving average, while a 200-day moving average shows a long-term trend. FMSA’s short-term moving average has stayed above its long-term moving average since May 2016. FMSA’s share price has also stayed above its long-term moving average since April. Its stock price is currently higher than its short-term moving average, indicating bullishness.
Let’s discuss FMSA’s returns in the next article.