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Why Is Forum Energy Technologies’ Share Price Trending Downward?

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Forum Energy Technologies versus peers and industry

Forum Energy Technologies (FET) is a Texas-based oilfield service (or OFS) company. It supplies products and services related to rig aftermarket activities, rig parts, and related fields. On March 3, 2016, Forum Energy Technologies was trading at $12.80, a 35% fall from its price a year ago.

The VanEck Vectors Oil Services ETF (OIH), which tracks 25 OFS companies, has declined 24% in the past one year. Precision Drilling (PDS), FET’s larger market-cap peer, has declined 32% during the same period. The entire OFS industry has been negatively affected by the energy price crash since June 2014.

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What does Forum Energy Technologies’ share price movement tell us?

Forum Energy Technologies’ share price has been trending downward since May 2015. FET’s quarterly revenues and earnings deteriorated in the past four quarters due to energy price depression and weak demand for OFS products and services. However, its cash flows from operations showed some degree of resilience. FET’s share price seems to be gathering some steam since the beginning of February.

Forum Energy Technologies’ moving averages

On March 3, Forum Energy Technologies’ share price was at 19.4% premium to its 50-day moving average (or DMA). It’s trading 12.5% below its 200-day moving average. FET is 0.05% of the Vanguard Energy ETF (VDE). VDE tracks an index made up of stocks of large, mid-sized, and small US companies within the energy sector.

Moving averages exhibit a smoother trend following the stock’s price movement. A 50-DMA is a short-term MA (moving average), while a 200-DMA shows a long-term trend. FET’s short-run MA has been the long-run MA in the past one year. This indicates a bearishness in FET’s share price. However, FET’s share price has been ahead of its short-run MA since the last week of February, indicating relative strength in FET’s share price.

In this series, we’ll look at the following for Forum Energy Technologies:

  • top-line and bottom-line growth
  • balance sheet
  • valuation multiples

In the next part, we’ll see what the company’s management is saying.

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