Comparable company analysis
Core Laboratories (CLB) is the largest company by market capitalization in our set of select OFS (oilfield equipment and services) companies. By market capitalization, CARBO Ceramics (CRR) is the smallest in the set, as you can see in the following table.
Flotek Industries’ (FTK) EV (enterprise value), when scaled by the TTM (trailing 12-month) adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) is higher than the peers’ average in the group. McDermott International’s (MDR) TTM EV-to-EBITDA multiple is the lowest in the group.
Flotek’s forward EV-to-EBITDA multiple compression versus its TTM EV-to-EBITDA is sharper than its peers’ average in the group. Sell-side analysts expect Flotek’s adjusted EBITDA to rise sharper in the next four quarters compared to its peers. It usually reflects a higher current valuation or higher EV-to-EBITDA multiple compared to its peers.
Flotek’s debt-to-equity multiple is one of the lowest in the group. A lower multiple could indicate a reduced debt load and lower financial risks. It boosts investors’ confidence particularly when crude oil prices are volatile. CARBO Ceramics’ leverage is the lowest in our group. Flotek accounts for 0.04% of the iShares S&P Small-Cap 600 Growth ETF (IJT). Since June 30, 2017, IJT has seen a 3% rise—compared to nearly a 33% fall in Flotek’s stock price.
Flotek Industries’ forward PE (price-to-earnings) multiple compression versus its current PE multiple is steeper than its peers’ average in our group. Sell-side analysts expect Flotek’s adjusted earnings to rise sharper in the next four quarters compared to its peers. Read Which Oilfield Service Stocks Look Attractive after 2Q17? for more on OFS companies’ valuation multiples.