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Mitcham Industries, Inc.

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Investors hate anything to do with the energy sector right now. Mitcham Industries, Inc. has sold off about 26% in just the month of May alone. That makes this Zacks #1 Rank (Strong Buy) a big value with a forward P/E of just 6.8.

Mitcham supplies rental or new seismic equipment to the oil and gas industry, seismic contractors, government agencies and universities. It also manufactures specialized seismic marine equipment through its Seamap brand.

A global company headquartered in Texas, it has sales and service offices in Canada, Australia, Singapore, Russia, Peru, Colombia, and the United Kingdom.

Record Fiscal 2012 Fourth Quarter

On Apr 3, Mitcham reported its fiscal 2012 fourth quarter results and blew by the Zacks Consensus Estimate by 43%. Earnings per share were 77 cents compared to the consensus of 55 cents. It made just 17 cent in the year ago quarter.

Revenue soared 88% to a record $37 million from $19.7 million a year ago. Sales were propelled by equipment leasing which rose 87% to $23.7 million from $12.7 million in the 2011 fiscal fourth quarter.

The company benefited from higher utilization and a strong global seismic market, particularly in the United States, Latin America, Europe and North Africa. There was also strong activity in the marine leasing business.

"Demand for land seismic rental equipment in the U.S. has picked up sequentially, mainly driven by activity in several of the shale plays," said Bill Mitcham, the President and CEO.

Fiscal 2013 Still Looking Strong

As of Apr 3, the company continued to see indications of strong demand for seismic services, especially in the international markets.

The trends that produced record quarters in fiscal 2012 have continued into fiscal 2013. All of its land recording channels have been committed during the first quarter, as was the case in fourth quarter of fiscal 2012. That indicates a good utilization of its lease pool.

It also entered into fiscal 2013 with a strong order book at Seamap.

Fiscal 2013 Zacks Consensus Estimate Rises

Given the strong fiscal fourth quarter and bullish outlook, it's not surprising that the fiscal 2012 Zacks Consensus Estimate has jumped 12% to $2.66 from $2.34 in the last 60 days.

That is earnings growth of 32% over fiscal 2012 where it made just $2.02 per share.

Plenty of Value

Shares have significantly weakened over the last few weeks.

Mitcham is now an even deeper value. Its P/E of 6.8 is well below that of its peers which average 13.4.

Additionally, the company has a price-to-book ratio of only 1.4. A P/B under 3.0 usually means there is value.

Mitcham also has a 1-year return on equity (ROE) of 18%. That easily beats its peers which average only 7.1%.

If you're an investor looking for a beaten down value stock with double digit earnings growth, you may want to consider Mitcham.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

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