Lowering Frac Sand Companies' FVEs Due to Lower Pricing Outlook From Regional Sand Disruption
We are lowering our fair value estimates for all covered frac sand companies to update for recent industry developments, most notably deteriorating pricing in the face of continued low-cost sand additions. Our U.S. Silica fair value estimate moves to $15.50 per share from $24.50, Covia to $7 from $15.75, Smart Sand to $3 from $6, and Hi-Crush to $8.50 per unit from $11.50. Our no-moat ratings for each of the companies remain in place. We are also increasing our uncertainty rating for U.S. Silica...Smart Sand is a frac sand supply and services company. The company is a producer of Northern White raw frac sand, which is a proppant used to improve hydrocarbon recovery rates in the hydraulic fracturing of oil and natural gas wells. The company also provides proppant logistics solutions to its customers through its in-basin transloading terminal and wellsite storage capabilities. The company markets its products and services primarily to oil and natural gas exploration and production companies and oilfield service companies and sells its products under a combination of long-term take-or-pay contracts and spot sales in the open market.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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