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Comparing the Returns of 5 OFS Companies by Net Debt-to-Equity

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Comparing returns

In this series, we have been discussing the five OFS (oilfield equipment and services companies) with the highest net debt-to-equity ratios in Q1 2018. In this article, we’ll compare their stock market returns in the past year. 

From June 1, 2017, to June 1, 2018, Key Energy Services (KEG), the OFS stock with the highest net debt-to-equity ratio as of March 31, 2018, produced an -11% return. Schlumberger (SLB) outperformed KEG with a -1.2% one-year return, and Halliburton (HAL) outperformed SLB with a 7.9% one-year return.

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Core Laboratories (CLB) has been the strongest performer among the OFS companies with the highest net debt-to-equity ratios in the past year. CLB produced a 20% return from June 1, 2017, to June 1, 2018. On the other hand, Nabors Industries (NBR) was the weakest performer among these OFS companies, with a -17.6% one-year return in the same period. Therefore, three of the five OFS companies with the highest net debt-to-equity ratios have produced negative returns in the past year.

Stocks versus industry, the broader market

In comparison, since June 1, 2017, the Energy Select Sector SPDR ETF (XLE) has risen 16%. XLE tracks an index of US energy companies in the S&P 500 Index. The VanEck Vectors Oil Services ETF (OIH) has witnessed a 3.4% one-year return. OIH tracks an index of 25 OFS companies. The SPDR S&P 500 ETF (SPY), which represents the broader equity market, has produced a 12.4% return in the same period. The energy sector makes up 6.3% of SPY.

Key Energy Services, the OFS company with the highest net debt-to-equity ratio in Q1 2018, has grossly underperformed the OFS industry, the energy industry, and the broader market in the past year.

Next, we’ll discuss short interest in these OFS stocks.

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