Yahoo Finance 4 Top-Ranked Oilfield Service Stocks for Your Portfolio
The Zacks Oil and Gas - Field Services industry appears on track to achieve substantial gains as energy investment ticks up and demand for products and services to drill hydrocarbons continues to move higher. Building on this bullish narrative, firms like Halliburton HAL, Schlumberger SLB, Nine Energy Service NINE and Select Energy Services WTTR) have room for upside and are likely to see impressive revenue and cash flow growth.
Strong Industry Resurgence
Oilfield services companies were one of the hardest hit during the pandemic as top energy companies resorted to spending cuts (particularly on the costly upstream projects) owing to plunging profit margins. This, in turn, meant cancellation or contract renegotiation for equipment suppliers. Unprecedented declines in activity levels and a sharp fall in exploration and production (E&P) capital expenditure led to lower revenues and pricing headwinds.
Apart from accelerating money flows into the Oil/Energy space, increased efficiencies and cost-reducing technological advances have renewed interest in the oilfield service space, raising hopes for the industry’s recovery. As the industry becomes less fragmented through a spate of mergers and acquisitions, commodity prices remain robust and drilling activities pick up, the market for services companies is on the mend. The lower competitive intensity also gives the sector components freedom to implement price increases. A combination of higher volume and pricing is expected to improve energy service companies’ margins.
The oilfield service companies are also well positioned to benefit from other favorable industry trends, including a rebound in the highly lucrative international markets, a pick up in offshore activities and increasing complexity of the projects that require more technology. On top of this, OPEC’s conservative production policy, sanctions on Russian oil and limited availability of spare supply capacity are likely to further strengthen the industry dynamics.
All this adds up to the Zacks Oil and Gas - Field Services group currently carrying a Zacks Industry Rank #22 — placing it in the top 9% of around 250 Zacks industries. The group’s excellent position indicates fairly strong near-term prospects for its constituent companies.
4 Oilfield Service Stocks to Benefit From a Positive Macro Environment
With crude demand set to remain robust and eventually surpass the pre-COVID record, most of the domestic oilfield service capacity is on the verge of being exhausted. In this context, we see a strong order book for providers of equipment and services that help E&P companies find and extract fossil fuels.
To guide investors to the right picks, we have highlighted four oilfield service companies that carry a Zacks Rank #1 (Strong Buy). The Zacks Rank is a reliable tool that helps you to trade with confidence regardless of your trading style and risk tolerance. To learn more about how you can use this proven system for market-beating gains, visit Zacks Rank Education.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Halliburton: Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors.
The 2022 Zacks Consensus Estimate for this Houston, TX-based firm indicates 94.4% year-over-year earnings per share growth. Halliburton beat the Zacks Consensus Estimate for earnings in three of the last four quarters, the average being 5.5%. HAL’s shares have risen 50% this year so far.
Schlumberger: Schlumberger is a well-diversified and well-managed oilfield service provider, involved in different activities. With broad, diverse and differentiated operations, the company has a presence in over 100 countries.
Schlumberger has an expected earnings growth rate of 68% for the current year. SLB beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 12.7%. Valued at around $66.6 billion, Schlumberger has gained 63.9% year to date.
Nine Energy Service: Nine Energy Service specializes in offering completion solutions to energy firms within North America and abroad. The 2022 Zacks Consensus Estimate for the Houston, TX-based firm indicates 121.4% year-over-year earnings per share growth. NINE has a market capitalization of $307.6 million.
Nine Energy Service beat the Zacks Consensus Estimate for earnings in each of the last four quarters. It has a trailing four-quarter earnings surprise of 58.8%, on average. NINE shares have rocketed 776% so far in 2022.
Select Energy Services: This Houston, TX-headquartered company provides its customers — primarily oilfield operators — with sophisticated end-to-end water solutions, stimulation chemicals, and ESG offerings. As the rig and frac markets continue to improve, we expect accelerated growth in its base business. Helped by acquisitions, Select Energy Services continues to gain market share and improve profitability.
The 2022 Zacks Consensus Estimate for the firm indicates 231.3% year-over-year earnings per share growth. Over the past 60 days, the Zacks Consensus Estimate for 2022 has moved up 50%. Select Energy Services, whose shares have gained 30.5% this year so far, has a trailing four-quarter earnings surprise of roughly 30.6%, on average.
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Schlumberger Limited (SLB) : Free Stock Analysis Report
Halliburton Company (HAL) : Free Stock Analysis Report
Select Energy Services (WTTR) : Free Stock Analysis Report
Nine Energy Service, Inc. (NINE) : Free Stock Analysis Report
