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What Does Flotek Industries’ Forward Valuation Suggest?

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Mar. 14 2018, Updated 12:50 p.m. ET

Flotek Industries’ EV-to-EBITDA trend

As of December 31, 2017, Flotek Industries’ (FTK) EV (enterprise value) decreased. The stock price declined compared to a year ago. Flotek Industries’ adjusted EBITDA declined during the same period and more than offset the lower EV. Flotek Industries’ valuation, expressed as the EV-to-EBITDA multiple, increased in 2017—compared to 2016. Since December 31, 2017, Flotek Industries’ stock price has increased ~38% as of March 9, 2018. Flotek Industries’ EV increased, which led to a rise in its current EV-to-EBITDA multiple.

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Forward EV-to-EBITDA multiple

The forward EV-to-EBITDA multiple considers sell-side analysts’ consensus EBITDA estimate for the next 12 months. Flotek Industries’ forward EV-to-EBITDA multiple (11.7x) is significantly lower than its current EV-to-EBITDA multiple (~199x). Analysts expect a significantly higher EBITDA for Flotek Industries in the next 12 months. Flotek Industries’ current EV-to-EBITDA multiple is significantly 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. Flotek Industries accounts for 0.03% of the iShares Russell 2000 Value ETF (IWN). IWN increased 9% in the past year—compared to a 44% slide in Flotek Industries’ stock price during the same period.

Forward EV-to-EBITDA comparison

Patterson-UTI Energy’s (PTEN) forward EV-to-EBITDA of 5.6x is at a 37% discount to its current EV-to-EBITDA multiple. Weatherford International’s (WFT) forward EV-to-EBITDA of 11.9x is at a 50% discount to its current multiple. RPC’s (RES) forward EV-to-EBITDA multiple of 6.4x is at a 39% discount to the current multiple.

PE multiple

Flotek Industries’ current PE (price-to-earnings) multiple isn’t meaningful due to its negative adjusted earnings. Flotek’s forward PE multiple reflects sell-side analysts’ estimates of negative earnings in the next 12 months. The forward PE multiple indicates sell-side analysts’ consensus earnings estimate for the next 12 months.

Next, we’ll discuss Oil States International’s (OIS) valuation multiples.

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