Layne Christensen: Wet as in water

Rating:

The growth strategy of Layne Christensen Company (Nasdaq:LAYN) is all wet, and that may be a good thing for investors in this century-old Kansas-based drilling and mining company.

Wet as in water, which has seen its demand rising in tandem with that for fossil fuels. Management reminded investors in the fiscal 2008 annual report that “Layne Christensen continues to be anchored by its water infrastructure division.”

Layne Christensen operates in four segments: mineral exploration, energy, water resources and a smaller geo construction operation — the latter helps give projects a solid base. Should Layne post revenue growth at the 20% rate of fiscal 2008, it could be a billion-dollar company next year. Last September, Layne ranked 78th among Fortune magazine’s fastest-growing companies.

For the three months ended April 30, Layne Christensen’s revenue grew 21.3% to $244.5 million, with earnings per share increasing $0.03 to $0.55, in line with expectations. While its three primary business segments had double-digit revenue growth, mineral exploration was the biggest contributor to net income in fiscal 2009’s first quarter.

But water is where it’s at for Layne Christensen, and the prospect of where that will take the stock has whet the appetite of analysts — at least a little. Four of six analysts surveyed by Thomson Reuters rate Layne a “hold,” with the others calling it a “buy” or “strong buy.” They’re apparently thirsting for more from water, which Layne Christensen finds, pipes and treats — both water and wastewater.

Shares of Layne Christensen hit a 52-week high of $59.19 on Oct. 26, but slid as low as $32.08 on March 17, following a December reality check. From Dec. 4, when shares hit an intraday high of $55.28, to its low point, Layne dropped 42%. The . . .

For access to the full article, you must be a registered member - it's FREE.

Already a member? Please log in below