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Why Has ION Geophysical Outperformed the Industry?

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Mar. 16 2018, Updated 11:35 a.m. ET

ION Geophysical’s YTD returns compared to the industry

ION Geophysical’s (IO) YTD (year-to-date) returns were 26.3% as of March 13, 2018. So far in 2018, ION Geophysical has outperformed the US rig count, which has risen ~6%. During this period, ION Geophysical has also outperformed the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) (down 6.7%), the VanEck Vectors Oil Services ETF (OIH) (-5.2% returns), and the SPDR S&P 500 ETF (SPY) (3.7% returns). XOP represents the broader energy industry ranging from the upstream to downstream sectors.

ION Geophysical’s stock price was the highest YTD at $31.55 on February 14. Since then, the stock price has declined 21% as of March 13.

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How did ION Geophysical perform in 2017?

From 2016 through 2017, ION Geophysical’s revenues increased 14%. The company’s reported net loss reduced to 29.3 million in 2017—an improvement compared to the net loss of $64.7 million reported in 2016. A significant improvement in ION Geophysical’s E&P Technology & Services segment, led by new venture revenues originated from the company’s 3D multi-client reimaging programs offshore Mexico and Brazil and higher revenues from its 2D multi-client programs, led to the improved top and bottom line in 2017.

ION Geophysical’s FCF (free cash flow) turned positive in 2017—compared to its negative FCF in 2016. During the same period, ION Geophysical’s net debt declined 1%. Improved revenues, a lower net loss, and better FCF have contributed to ION Geophysical’s outperformance in 2018.

Next, we’ll compare Key Energy Services’ (KEG) YTD returns with market indicators. We’ll also analyze Key Energy Services’ fundamental metrics.

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