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Oil States International: Higher Earnings in the Next 12 Months?

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Mar. 14 2018, Published 10:17 a.m. ET

Oil States International’s EV-to-EBITDA trend

As of December 31, 2017, Oil States International’s (OIS) EV (enterprise value) decreased. Oil States International’s stock price declined compared to a year ago. The company’s adjusted EBITDA also declined during the same period and more than offset the lower EV. So, Oil States International’s EV-to-EBITDA multiple increased in 2017—compared to 2016. Since December 31, 2017, Oil States International’s stock price has decreased ~8% as of March 9. Oil States International’s EV has decreased, which led to a fall in its current EV-to-EBITDA multiple.

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Forward EV-to-EBITDA multiple

Oil States International’s (OIS) forward EV-to-EBITDA multiple (9.5x) is lower than its current EV-to-EBITDA multiple (~37x). Analysts expect a higher EBITDA for Oil States International in the next 12 months. Oil States International’s current EV-to-EBITDA is higher than the average of the OFS companies in the VanEck Vectors Oil Services ETF (OIH). The average EV-to-EBITDA for the companies in OIH is 24.8x. Oil States International accounts for 0.09% of the Vanguard Energy ETF (VDE). VDE has decreased 3% since March 10, 2017—compared to a 17% drop in Oil States International’s stock price during the same period.

Forward EV-to-EBITDA comparison

ION Geophysical’s (IO) forward EV-to-EBITDA of 4.8x is at a 49% discount to its current multiple. Oceaneering International’s (OII) forward EV-to-EBITDA stands at 12.7x, which is at a 32% premium to its current multiple. Schlumberger’s (SLB) forward EV-to-EBITDA multiple of 12.8x is at a 20% discount to its current multiple. To learn more, read Schlumberger’s Outlook and Fundamentals in 2018.

PE multiple

Oil States International’s current PE (price-to-earnings) multiple isn’t meaningful due to its negative adjusted earnings. Oil States International’s forward PE multiple reflects sell-side analysts’ estimates of negative earnings in the next 12 months.

Next, we’ll discuss National Oilwell Varco’s (NOV) valuation multiples.

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