Gauging Weatherford International’s Valuation versus Peers
Comparable company analysis
As you can see in the table below, National Oilwell Varco (NOV) is the largest, by market capitalization, among our set of oilfield services and equipment (or OFS) companies. Oil States International (OIS) is the smallest company in the group by market capitalization.
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Weatherford International’s (WFT) enterprise value (or EV) when scaled by trailing-12-month (or TTM) adjusted EBITDA is higher than peers’ average in our set here. WFT’s EBITDA is adjusted for non-recurring items like impairment charges, severance, and facility closures charges. EV represents the sum of its equity value and net debt.
WFT’s forward EV-to-EBITDA multiple compression is the steepest in our group here, which reflects analysts’ expectations of higher EBITDA growth compared to peers in the next four quarters. It also reflects Weatherford International’s valuation, expressed as a higher current EV/EBITDA multiple compared to peers. WFT is 0.32% of the iShares U.S. Energy ETF (IYE). On September 12, IYE was unchanged compared to its price on June 30. During the same period, WFT rose 8%.
Weatherford’s debt-to-equity multiple is the highest in our set. A higher multiple indicates a larger debt load compared to shareholders’ equity, and it also indicates increased riskiness. Oil States International has the lowest debt-to-equity ratio in the group.
Price-to-earnings ratio (or PE)
Weatherford International’s forward PE is also unavailable, reflecting analysts’ expectation of a loss in the next four quarters. National Oilwell Varco’s (NOV) forward PE multiple is the highest in our group while McDermott International’s forward PE is the lowest in the group.
Sell-side analysts also expect Core Laboratories’ (CLB) earnings growth rate to be ~40% in the next three to five years.
Next, we’ll discuss whether investors have shown interest in WFT’s stock, as indicated by its short interest.