Comparable company analysis
As you can see in the table below, CARBO Ceramics (CRR) is the smallest OFS (oilfield services and equipment) company by market capitalization among our group of select peers. Core Laboratories (CLB) is the largest in the group by market capitalization.
McDermott International’s (MDR) TTM (trailing-12-month) EV-to-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple is the lowest in the group. When scaled by TTM adjusted EBITDA, Flotek’s (FTK) EV (enterprise value, or total of equity value and net debt) is higher than the peer average.
FTK’s forward EV-to-EBITDA multiple compression as compared with its TTM EV-to-EBITDA is steeper than the peer average because the sell-side analysts expect FTK’s adjusted EBITDA to rise more sharply over the next four quarters than those of its peers. This typically exhibits itself in a higher current EV-to-EBITDA multiple.
FTK’s DE (debt-to-equity, or leverage) multiple is lower than the group average, which could indicate a decreased debt load and fewer financial risks. This increases investor confidence, particularly when crude oil prices are volatile. CLB’s leverage is the highest in our group.
Flotek’s TTM PE (price-to-earnings) multiple is higher than those of its peers, given its low adjusted earnings. Its forward PE multiple compression compared with its current PE multiple is steeper than the peer average as well, because the sell-side analysts expect FTK’s adjusted earnings to rise steeply over the next four quarters.
Notably, FTK makes up 0.06% of the iShares S&P Small-Cap 600 Growth ETF (IJT). Since March 31, 2017, IJT has risen 2%, compared with FTK’s 30% fall.