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Key Energy Services’ Stellar Performance in 2018

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Mar. 19 2018, Updated 7:32 a.m. ET

Key Energy Services’ YTD returns

Key Energy Services’ (KEG) YTD (year-to-date) returns were nearly 25.5% as of March 13, 2018. During this period, Key Energy Services has underperformed the US rig count (up 6%), the Energy Select Sector SPDR ETF (XLE) (down 6%), and the VanEck Vectors Oil Services ETF (OIH) (down 5.2%). XLE represents the energy market, while OIH represents the oilfield equipment and services industry. Key Energy Services accounts for 0.01% of the Vanguard Energy ETF (VDE). VDE has fallen 6% YTD and has underperformed Key Energy Services in 2018.

Key Energy Services’ stock price reached a YTD high at $17.34 on January 11. Since then, the stock price has declined 14.7% as of March 13.

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What’s impacting Key Energy Services’ returns in 2018?

From 2016 through 2017, Key Energy Services’ revenues increased 4.5%. The company’s revenues improved primarily due to stronger revenues in the Coiled Tubing Services segment—partially offset by lower revenues from the international business. Key Energy Services’ recorded net loss reduced to $120.6 million in 2017 from a net loss of $142 million in 2016. Key Energy Services’ FCF (free cash flow) remained negative in 2017—compared to a steeper negative FCF in 2016. The company’s net debt increased 13% in 2017 compared to 2016 because its cash and equivalents declined in 2017. Improved revenues and a lower net loss have contributed to Key Energy Services’ outperformance in 2018, while its debt level is still a concern.

On October 24, 2016, Key Energy Services filed for bankruptcy under Chapter 11. On December 15, 2016, the company emerged from bankruptcy. Key Energy Services’ 2016 results include its predecessor’s results on January 1–December 15, 2016, and its successor’s results on December 16–December 31, 2016.

Next, we’ll compare McDermott International’s (MDR) YTD returns with market indicators. We’ll also analyze the company’s fundamental metrics.

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