Despite releasing better-than-expected results last week, Carbo Ceramics (NYSE:CRR) has seen its stock plummet since reaching $150 in June. This producer of ceramic materials used in hydraulic drilling is facing increased competition from an inexpensive substitute product and a challenging natural gas drilling environment. However, a DRAG analysis reveals that there are reasons to believe that Carbo shares have now become significantly undervalued.
Please click here to read my article, which outlines the DRAG analysis framework in more detail.
To summarize, the four variables used in a DRAG (dividend and risk adjusted growth) analysis are as follows (each company is ranked from 0 to 3 in each category):
1) How cyclical is the industry in which Carbo Ceramics operates? 2) How strong is Carbo Ceramics' competitive position within this industry? 3) How risky is Carbo Ceramics' balance sheet? 4) What is Carbo Ceramics' dividend yield and dividend growth…
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Source: SeekingAlpha
(November 4, 2014 - 3:03 PM EST)
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