APY - Apergy Energy

[stockspinoffinvesting]

Anyone done any work on APY? It is Dover's energy spin-off. It will begin trading tomorrow.

 

Apergy (APY) sells artificial lifts, automation tools and drill-bit inserts and caters to the upstream oil & gas industry. Here is management's slide deck for additional background on the business:

https://investors.apergy.com/static-files/df3848f8-ef17-4384-80c2-4e01f5358f46

 

It is benefiting from the recovery in oil prices (EBITDA is expected to grow 36% this year).

 

In the when-issued market, APY has been trading in $34 to $40 range. Today it closed at $36.15 in the when-issued market and will begin regular way trading tomorrow. By my math, its trading at 12.5x '18x EBITDA vs. comps (BHGE, CLB, DRQ, FTK, FET, GDI, HAL, NOV, OIS, SLB, SPN) which trade at 14.8x. At the same time APY's EBITDA margins are higher than peers (23.8% vs. 13.8%). Apergy leverage (2.4x EBITDA vs. 1.9x) is a little higher than comps but seems reasonable.

 

Given mkt cap difference between DOV and APY ($14.3BN vs. $2.9BN), I'm hoping for some indiscriminate selling. I still need to do more work, but I'm curious if anyone else has looked at it / has any thoughts.

 

Here is the latest Form 10:

https://www.sec.gov/Archives/edgar/data/1723089/000119312518114458/d501571dex991.htm

 

Thanks,

Rich