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The Top and Bottom of Oilfield Service Stocks in 3Q17

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The Top and Bottom of Oilfield Service Stocks in 3Q17 PART 1 OF 12

Top 5 Oilfield Service Stocks by Expected 3Q17 Revenue Growth

Comparing oilfield service and equipment companies

In this series, we’ll examine and rank the top and bottom US OFS (oilfield service) and equipment companies in 3Q17, based on analysts’ expectations. The companies we’ve selected for comparison are all part of the VanEck Vectors Oil Services ETF (OIH) and have market caps over $2 billion. We’ll compare these companies by

  • net income
  • operating earnings
  • revenueTop 5 Oilfield Service Stocks by Expected 3Q17 Revenue Growth

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Patterson-UTI Energy’s revenue growth

Sell-side analysts expect Patterson-UTI Energy (PTEN), a leading rig contractor and oilfield service provider, to register ~19% revenue growth between 2Q17 and 3Q17. It is expected to benefit from the current pad drilling trend and longer laterals in West Texas, and rig fleet upgrading. The company expects revenue from its pressure pumping business to rise 25% between 2Q17 and 3Q17, with the gross margin improving 21% despite higher carrying costs associated with future hydraulic fracturing reactivation.

Weatherford International

Wall Street analysts expect Weatherford International (WFT) to see ~9% revenue growth between 2Q17 and 3Q17. Management expects continued upstream activity improvement in North America, an increase in revenue from the Europe, Caspian, Russia, and sub-Saharan Africa region due to higher activity in the North Sea, and higher revenue from the Middle East and Asia region. For more on Weatherford, read What’s Keeping Weatherford Down despite Margin Improvement? In comparison, analysts expect U.S. Silica Holdings (SLCA) to post ~15% revenue growth between 2Q17 and 3Q17.

Baker Hughes, a GE company

Whereas we have excluded Baker Hughes, a GE company (BHGE) from the rest of our discussion in this series, analysts expect BHGE to register ~133% revenue growth between 2Q17 and 3Q17. BHGE was formed by combining Baker Hughes’s and GE’s (GE) OFS businesses on July 3, 2017. For more on BHGE, read GE to Partner with BHI? The Changing Oilfield Services Landscape.

The combined company is estimated to have $32 billion in annual revenue. BHGE makes up 2.3% of the SPDR S&P Oil & Gas Equipment & Services ETF (XES). XES has fallen 9% in the past year, whereas BHGE’s stock price has risen 11%. The Dow Jones Industrial Average (DJIA-INDEX) has risen 23% in the past year. Next, we’ll discuss which OFS companies could see the biggest fall in revenue in 3Q17, according to analysts.

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