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Best Oilfield Service Stocks for 4Q16: Earnings Growth

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Will Flotek Industries be the outperformer?

Wall Street analysts expect Flotek Industries (FTK) to register positive EBITDA (or earnings before interest, tax, depreciation & amortization) in 4Q16 compared to a negative adjusted EBITDA in 3Q16. FTK resisted energy market weakness through steady performance in its energy chemistry segment. EBITDA measures a company’s operating earnings. Read more about Flotek Industries in Market Realist’s Flotek Industries’ Guidance: Did It Boost the Stock’s Volatility?.

Flotek Industries is expected to post $1.2 million in adjusted EBITDA in 4Q16; a switch over from -$0.7 million in 3Q16. FTK expects growth to come from:

  • an agreement with Anton Oilfield Services Group of China
  • growth opportunities in South America
  • the acquisition of International Polymerics in JulyEBITDA Top
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FMSA’s and WFT’s expected EBITDA growth

Fairmount Santrol Holdings (FMSA) is expected to post $10.1 million adjusted EBITDA in 4Q16. This would more than double compared to 3Q16. FMSA’s management plans to reduce operating costs across all product categories, by re-negotiating railcar leases and purchase contracts. It also aims to improve operating cost efficiency through focusing on cost-effective operations.

Weatherford International’s (WFT) adjusted EBITDA expected by Wall Street analysts is ~$108 million in 4Q16, up 59% compared to 3Q16. A stronger North American energy market is expected to brighten WFT’s future in 4Q16. Wall Street analysts also expect Halliburton’s (HAL) EBITDA to increase ~16% in 4Q16 over 3Q16. Halliburton is 0.22% of the iShares S&P 500 Value ETF (IVE).

Next, we’ll discuss the five OFS companies by steepest expected EBITDA declines in 4Q16.

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