MIND Technology Inc (MIND)

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RECOMMENDATION

We rate MITCHAM INDUSTRIES INC (MIND) a BUY. This is driven by several positive factors, which we
believe should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
robust revenue growth, largely solid financial position with reasonable debt levels by most measures,
expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that
the company has had sub par growth in net income.

HIGHLIGHTS

The revenue growth came in higher than the industry average of 16.0%. Since the same quarter one year
prior, revenues rose by 35.0%. This growth in revenue does not appear to have trickled down to the
company's bottom line, displayed by a decline in earnings per share.
MIND's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying
that there has been very successful management of debt levels. To add to this, MIND has a quick ratio of 1.97,
which demonstrates the ability of the company to cover short-term liquidity needs.
The gross profit margin for MITCHAM INDUSTRIES INC is rather high; currently it is at 68.80%. It has
increased from the same quarter the previous year. Despite the strong results of the gross profit margin,
MIND's net profit margin of 14.10% significantly trails the industry average.
MITCHAM INDUSTRIES INC's earnings per share declined by 36.8% in the most recent quarter compared to
the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the
past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year,
MITCHAM INDUSTRIES INC reported lower earnings of $0.90 versus $1.09 in the prior year. This year, the
market expects an improvement in earnings ($1.05 versus $0.90).
Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also
clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings
results. The stock's price rise over the last year has driven it to a level which is somewhat expensive
compared to the rest of its industry. We feel, however, that other strengths this company displays justify
these higher price levels.