Today is Tuesday, March 10, 2020, and this is your daily energy stocks roundup. Today we’re looking at the valuations of Cactus (NYSE: WHD), Baker Hughes (NYSE: BKR), and Liberty Oilfield Services (NYSE: LBRT).
Cactus (NYSE: WHD)
Cactus (NYSE: WHD) is a $1.037 billion company today with a one-year return of -60.23%. Let’s look at its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio to gauge whether or not it’s a good investment.
The company’s P/E ratio of 7.546 is 63.88% lower than the industry average of 20.89. That’s good. A company’s P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively low P/E ratio is generally an indicator that a company is undervalued.
Cactus’ enterprise-value-to-free-cash-flow (EV/FCF) ratio of 7.184 is 36.65% lower than its industry average of 11.34. That’s good.
A company’s EV/FCF ratio measures its enterprise value (market cap adjusted for cash holdings and debt) against its free cash flow (how much money the company has after all of its cash outflows). A low EV/FCF ratio indicates that a company is performing efficiently, managing its debt well, and maintaining a strong cash position.
The debt-to-equity (D/E) ratio of Cactus has held steady at zero over the last year. That’s good.
A company’s D/E ratio equals its total liabilities divided by its shareholder equity. It’s a measure of a company’s financial leverage. A declining D/E ratio indicates that a company is decreasing its debt burden over time, while a rising ratio indicates that a company is taking on more debt over time.
Cactus has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
Baker Hughes (NYSE: BKR)
Baker Hughes (NYSE: BKR) is a $13.48 billion company today with a one-year return of -51.42%. Judging by its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio, is it a good investment?
The company’s P/E ratio of 59.45 is 184.59% higher than the industry average of 20.89. That’s not good.
Baker Hughes’ enterprise-value-to-free-cash-flow (EV/FCF) ratio of 32.54 is 186.95% higher than its industry average of 11.34. Not a good sign.
The debt-to-equity (D/E) ratio of Baker Hughes has decreased by 27.02% over the last year. That’s good.
Baker Hughes has scored favorably on 1 of our 3 valuation metrics. With this in mind, we believe the stock is slightly overvalued.
Liberty Oilfield Services (NYSE: LBRT)
Liberty Oilfield Services (NYSE: LBRT) is a $336.55 million company today with a one-year return of -74.76%. Is it a good value based on its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio?
The company’s P/E ratio of 5.155 is 75.32% lower than the industry average of 20.89. That’s good.
Liberty Oilfield Services’ enterprise-value-to-free-cash-flow (EV/FCF) ratio of 9.57 is 15.61% lower than its industry average of 11.34. That’s good.
The debt-to-equity (D/E) ratio of Liberty Oilfield Services has decreased by 22.24% over the last year. That’s good.
Liberty Oilfield Services has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
To summarize, we believe Cactus (NYSE: WHD) is a great value, Baker Hughes (NYSE: BKR) is slightly overvalued, and Liberty Oilfield Services (NYSE: LBRT) is a great value.
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