ION Geophysical Corp (NYSE:IO) is among the biggest gainers over the last few months. IO stock price increased more than 58% in the last month alone, soaring close to 140% in the last three months. The stock is up 280% in the last six months, lifted by improving the market environment for oil & gas prices. Moreover, the company’s strong performances in the last two quarters also added to the trader’s sentiments.
ION Geophysical Corp offers a range of seismic products and services, including navigation and data-management software products, seismic acquisition equipment, and seismic data processing services to oil and natural gas industry.
The demand for ION products and services are directly correlated with the investments in oil & gas production activities. Oil prices are stabilizing over the past couple of quarters, allowing exploration & production companies to invest in growth opportunities. Thus, demand for ION products and services are also strengthening.
Over the last four quarters, its revenue increased 73%, while its earnings surged to $5.0 million in the latest quarter compared to a loss of $6.3 million in 4Q16. In the third quarter of 2017, ION revenue increased 33% to $61 million compared to the previous quarter, thanks to a strong demand for its 3D multi-client programs together with new 2D programs.
Moreover, the backlog of its data processing programs and multi-client new ventures was at $40 million at the end of third quarter. The company’s strategy of targeting geographic areas that are less dependent on market cycles is working.
The company’s cash generating potential has also been strengthening with the growth in earnings. Moreover, its liquidity situation is also strong to invest in growth opportunities. At the end of the last quarter, ION had total liquidity of $52.3 million, comprising of $12.1 million of undrawn revolving credit facility and $40.2 million of cash on hand.
The market fundamentals are also offering support to its stock price and financial outlook. In the latest trading session, oil prices hit the highest level in the last three years of $70 a barrel. Therefore, exploration & production companies are likely to expand their investments in growth opportunities, which will result in a higher demand for ION products and services.
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