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2Q17 Results Analysis: Why Flotek Industries Stock Is Falling

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2Q17 Results Analysis: Why Flotek Industries Stock Is Falling PART 1 OF 6

Why Flotek Industries Stock Is Falling

Flotek Industries versus peers and industry

On August 9, 2017, Flotek Industries (FTK) was trading at $6.11, down ~35% since the beginning of 2017. Flotek Industries is an oilfield equipment and services (or OFS) company that provides specialty chemicals to upstream energy companies and to the consumer industry.

Superior Energy Services (SPN), FTK’s larger market cap peer, has fallen 45% year-to-date. The VanEck Vectors Oil Services ETF (OIH) has fallen 30% year-to-date. National Oilwell Varco (NOV) has fallen 18% since the beginning of this year. McDermott International (MDR) has fallen 11% during the same period.

Why Flotek Industries Stock Is Falling

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What does FTK’s stock price movement tell us?

Flotek Industries’ stock price has fallen gradually since September 2016. Although crude oil prices have been gathering some steam since late June this year, Flotek’s stock price has continued to dip. FTK’s revenues grew sharply in the two quarters before 2Q17. However, the company continued to report net losses in the last four quarters. On top of that, FTK’s cash flow deteriorated further in 2Q17, which explains why FTK’s stock price has underperformed crude oil prices recently. In this series, we’ll discuss the other factors that have moved OFS stocks. To know more about energy prices, read What Could Push US Crude Near the $50 Mark?

Flotek Industries’ moving averages

On August 9, 2017, Flotek Industries’ stock price was trading at 29% discount to its 50-day moving average (or DMA). It is also trading 43% below its 200-day moving average. Moving averages exhibits a smoother trend following the stock’s price movement.

FTK’s long-run MA has been running above its stock price since April 2017, exhibiting longer term weakness in FTK’s stock price. Also, FTK’s short-run MA moved above the stock price nearly at the same time. This indicates short-term resistance to FTK’s stock price.

Series highlight

In this series, we will discuss industry indicators, Flotek Industries’ top-line and bottom-line growth, and its balance sheet. We will start with Flotek Industries’ management comments in the next part.

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