This stock has gone completely and insanely parabolic. It was trading at 3.87 on 4/16. Today, just a little more than 2 months later, it closed at 41.60- roughly a 11 bagger in that timeframe.
One might reasonably assume that they must have made a massive oil find, to justify that explosive rise. But this is not at all the case. Rather the catalyst was a .22 EPS quarter, and momentum buyers did the rest.
This is a fundamentally boring company that doesn't have impressive growth prospects. And yet PDO is trading at more than 6 times their 2007 year end proven reserves! From their last 10k:
"Using year-end oil and gas prices and lease operating expenses, the estimated
value of future net revenues before income taxes to be derived from Pyramid's
proved developed oil and gas reserves, discounted at 10%, were $27,414,000 at
December 31, 2007, $12,358,000 at December 31, 2006, $12,694,000 at December
31, 2005, $4,643,000 at December 31, 2004, and $4,617,000 at December 31,
2003."
Sometimes oil and gas plays will trade near P2 (proven plus probable) reserve values if there is an expectation that near term drilling will move probable reserves into proven categories. I don't see that here. A market cap near P1 reserve valuation wouldn't be unreasonable....but 6 times P1 reserve valuation is pure mania and entirely ridiculous.
PDO's valuation is also absurd on a cash flow and P/E basis. A typical 5X cash flow valuation would give the stock a market cap of only around $25 million. Turning to a P/E analysis, even if one were to be extremely kind and assume that PDO's EPS run rate going forward will be roughly 50% higher than it was last quarter (because of elevated oil and gas pricing)- and therefore assume .33 per quarter, and 1.32 per year- PDO would currently be trading at more than 30 times that aggressive forward estimate. That's ridiculous, as even a P/E of 12 would be very generous for a garden variety producer with unimpressive reserves like PDO. A 12 P/E would value PDO around $15.84...but remember that this is based on a very optimistic $1.32 run rate. Plus, E&Ps are really more properly valued on a price/cash flow and reserve basis....and on those measures PDO would be EXTREMELY overvalued even at $15.84.