STEP Energy Services (STEP.TO), mcap=C$354m, price C$5.2 vs C$3.69

Pitch: Canadian pressure pumping firm at 4x forward EBITDA. Undervalued due to high leverage following debt-funded acquisitions. The pressure pumping market is to be undersupplied later this year. Stock is expected to benefit from positive earnings revisions, multiple expansion, and balance sheet de-risking.

Valuation: Trades under 4x EBITDA with Canadian peers at 7x and US peers PUMP, NEX, and LBRT at 6-10x. Trades below the replacement value of its pumps.

Exp. gain: Not specified

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