Tracking the Lafayette Stock Index reveals a changing of the guard

Waitr employees gather at the opening Nasdaq bell Photo courtesy of Nasdaq

As I watched Chris Meaux ring Nasdaq’s opening bell to celebrate Waitr going public last month, it got me thinking: What other Lafayette companies could I buy stock in? What I discovered on my search was one of the clearest indicators of what’s been happening to our economy over the past few years. We’re witnessing a changing of the guard, and Waitr’s splash on the NYSE is the latest indicator in the trend.

Conveniently, as part of its Economic Performance Index, the Lafayette Economic Development Authority created the Lafayette Stock Index, which includes all publicly traded companies headquartered in Lafayette.

LEDA’s latest edition of this index, released in the first quarter of 2018, lists eight locally headquartered, publicly traded companies:

  • LHC Group
  • Home Bancorp
  • MidSouth Bancorp
  • Petroquest Energy
  • Frank’s International
  • Stone Energy
  • PHI

Here’s a graph from LEDA’s report showing how those stocks have performed collectively since 2007:

One way of reading this is, if you’d invested in this index after the stock market crash of 2008, you could have more than doubled your money by 2014.

Unfortunately, that’s not the whole story. If you would have bought at the beginning of 2014, by the first quarter of this year your investment would be worth barely half of what you put in.

This catastrophic performance shouldn’t be all that surprising when you consider that five of these stocks operate in Lafayette’s decimated oil and gas industry. And these were the companies responsible for all of the index’s losses. Oil prices collapsed in late 2014, leading to a major economic tumble.

Oil services company Frank’s International sold shares north of $27 at the end of 2013; it trades at around $6 today. PHI’s stock dropped from more than $40 to less than $4. Petroquest’s in such bad shape that it was delisted from the New York Stock Exchange in May because its market capitalization fell below $15 million. Stone Energy went bankrupt then got acquired by Talos Energy. And MidSouth — a bank that’s long been heavily invested in providing financing for oil and gas operations — has seen share prices fall from about $18 to under $12 today.

But these losses weren’t just felt in the destruction of billions of dollars in market capitalization — which is the total value of the shares of a publicly traded company — they’ve had substantial impacts on the local workforce and economy. Frank’s International and Stone Energy moved their headquarters to Houston. MidSouth’s lagging performance — still reporting losses that run counter to the relative health of banking nationally — has led its second biggest shareholder to publicly argue that it’s time to sell. The bank’s time in Lafayette could be coming to an end, too.

It’s not been all bad news, thanks to the strength of Lafayette’s other two publicly traded banking enterprises. 

It’s not been all bad news, thanks to the strength of Lafayette’s other two publicly traded banking enterprises. Since the end of 2013, shares in IberiaBank have risen from just above $60 per share to more than $70, which may sound modest, but over the same time period the company’s market cap has more than doubled from $1.8 billion to near $4 billion. Home Bancorp has also seen great growth with its shares rising from $18.50 to $36.50, and its market cap growing from $130 million to almost $350 million.

But the biggest winner over the last five years has been LHC Group. The stock price of the national home health services provider ballooned from under $24 per share at the end of 2013 to more than $100 today — with even more incredible growth in its market cap, from just over $415 million to more than $3 billion.

Taking all of these numbers into account, the index’s performance is a microcosm of Lafayette’s economy as a whole.

While Lafayette’s used to living through the boom and bust cycles of the oil and gas industry, what we’re seeing now is not the typical up and down with another up around the corner. Instead what this index shows is a changing of the guard in our local economy.

The simply reality is that the oil and gas industry as we knew it is gone. Stone Energy isn’t coming back; it doesn’t even exist anymore as an independent company. Frank’s International isn’t likely to move back here. So what we’re left with in terms of publicly traded O&G-related companies headquartered in Lafayette are PetroQuest and PHI, which collectively have a market cap of less than $100 million.

Thankfully, Lafayette’s economy is more diversified than it used to be, as evidenced by the growth of companies like LHC Group, IberiaBank and Home Bancorp. But what’s happened is that these companies are no longer just examples of diversification; rather, they represent an increasingly large part of our economy’s foundation. In fact, we’re not far from the day when it could be inaccurate to call Lafayette an “oil and gas town.” We could become more of a banking and health care town.

Yet even then you’ve got to wonder if that’s enough. LHC, IberiaBank and Home Bancorp have already realized tremendous growth over the past five years, which begs whether they can keep that expansion up indefinitely — not to mention the risk that they become prime acquisition targets for even larger health care or banking enterprises or private equity firms.

It’s arguable that, while oil and gas were the past and health care and banking the present, Waitr represents our community’s best chance for building a stronger economic future. 

That brings us back to Waitr. It’s arguable that, while oil and gas were the past and health care and banking the present, Waitr represents our community’s best chance for building a stronger economic future. While it, too, may fail or move away, the company has the greatest potential to replace the billions in market cap that our community has lost in the last five years.

Today, Waitr’s stock hovers between $11 and $11.50 per share, with a market cap of a few hundred million. But it has the potential to grow to $20, $50, or $100 a share with a market cap that could someday reach into the billions. Indeed the company is already making big moves, acquiring a competitor and effectively doubling in size just this week.

What this all means is that moving forward, the growth of the Lafayette Stock Index will no longer be powered by pumping oil out of the ground but instead by delivering care to the ailing, financial services to businesses and individuals, and food to the lazy.

To be sure, a local economy doesn’t need publicly traded companies to thrive. The stock index itself is, at best, a thumb in the wind. What’s most significant about this index is how closely it mirrors the rise and fall of our local economy. Insofar as it reflects Lafayette’s recent fortunes, I can’t help but smile as I think back at Waitr ringing the bell.