Primary Vision
  • HOME
  • ABOUT US
    • ABOUT US
    • PRIMARY VISION AI INNOVATIONS
  • RESEARCH
    • INSIGHTS & ARTICLES
    • FREE ARTICLES
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!
    • FRAC SPREAD COUNT SIGN-UP!
    • ENTERPRISE SUBSCRIPTION PLAN SIGN UP!
  • HOME
  • ABOUT US
    • ABOUT US
    • PRIMARY VISION AI INNOVATIONS
  • RESEARCH
    • INSIGHTS & ARTICLES
    • FREE ARTICLES
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!
    • FRAC SPREAD COUNT SIGN-UP!
    • ENTERPRISE SUBSCRIPTION PLAN SIGN UP!
No Result
View All Result
Primary Vision
Home Market Trends

U.S. Well Services Part 2: Estimates And Valuation

Avik Chowdhury by Avik Chowdhury
June 14, 2022
in Market Trends
0
U.S. Well Services Part 2: Estimates And Valuation

  • Estimates suggest revenue growth in NTM 2023, and the growth rate can accelerate in NTM 2024 and NTM 2025
  • EBITDA can stay in the red in the next two years
  • The stock is relatively overvalued versus its peers at the current level

In Part 1 of this article, we discussed the U.S. Well Services’ (USWS) outlook, performance, and financial condition. In this part, we will discuss more.

Linear Regression Based Revenue Forecast

Based on a regression equation between the key industry indicators (crude oil price and U.S. rig count) and USWS’s reported revenues for the past seven years and the previous eight-quarters, I expect its revenues to increase in the next 12 months (or NTM) in 2023. The growth rate can accelerate in NTM 2024 and NTM 2025.

Based on the same regression models and the forecast revenues, I expect the company’s EBITDA to deteriorate in NTM 2023. While the EBITDA will remain negative in NTM 2024, it will improve compared to the previous year.

Target Price And Relative Valuation

Returns potential using the past average EV/Revenue multiple (1.26x) is lower (66% upside) compared to the forward EV/Revenue multiple (92% upside) but higher than the sell-side analysts’ expected returns (22% upside) from the stock.

USWS’s forward EV-to-Revenue multiple cotraction versus the current EV/Revenue is less steep than the EV/Revenue multiple contractions for its peers. This typically results in a lower EV/Revenue multiple. The company’s EV/Revenue multiple (1.58x) is higher than its peers’ (LBRT, NEX, and PUMP) average of 1.47x. So, the stock is overvalued versus its peers at this level.

What’s The Call On USWS?

USWS’s medium-term outlook is promising as plans to roll out four Nyx Clean Fleets by the end of 2022. Over the past several months, the company signed several vital contracts. As the length of contracts extended, its revenue and gross profit contribution per fleet should improve, too. In today’s scenario, electric pumps are fetching higher revenue per fleet because of their cost advantages over diesel fuel pumps and lower carbon footprint.

The stock is relatively overvalued at the current level. On the other hand, the cost inflation will affect its margin adversely in the near term. Plus, the negative shareholders’ equity signals significant financial risks, especially when combined with negative cash flows. So, the stock significantly underperformed the VanEck Vectors Oil Services ETF (OIH) in the past year. Given the overall risk level, I would suggest investors avoid the stock for now.

Previous Post

U.S. Well Services Part 1: Cleaner Pumps Join The Bandwagon, But Risk Factors Can Derail

Next Post

KLX Energy Services: Cost Inflation And Balance Sheet Risks Punch A Hole Through Growth Drivers

Related Posts

SLB’s Perspective in Q1: KEY Takeaways
Market Trends

SLB’s Perspective in Q1: KEY Takeaways

June 6, 2025
Market Sentiment Tracker: Is the U.S. Economy Quietly Rebounding?
Market Trends

Market Sentiment Tracker: Is the U.S. Economy Quietly Rebounding?

June 3, 2025
Monday Macro View: Electric Fleets Keep Expanding, Even as Completions Slow
Market Trends

Monday Macro View: Electric Fleets Keep Expanding, Even as Completions Slow

June 2, 2025
Patterson UTI’s Perspective in Q1: KEY Takeaways
Market Trends

Patterson UTI’s Perspective in Q1: KEY Takeaways

June 2, 2025
Market Sentiment Tracker: Credit Card Delinquencies Hit 14-Year High
Market Trends

Market Sentiment Tracker: Credit Card Delinquencies Hit 14-Year High

May 27, 2025
Monday Macro View: Is U.S. Shale Activity About to Slow Down
Market Trends

Monday Macro View: Is U.S. Shale Activity About to Slow Down

May 26, 2025
Next Post
KLX Energy Services: Cost Inflation And Balance Sheet Risks Punch A Hole Through Growth Drivers

KLX Energy Services: Cost Inflation And Balance Sheet Risks Punch A Hole Through Growth Drivers

Please login to join discussion

Recent News

SLB’s Perspective in Q1: KEY Takeaways

SLB’s Perspective in Q1: KEY Takeaways

June 6, 2025
Market Sentiment Tracker: Is the U.S. Economy Quietly Rebounding?

Market Sentiment Tracker: Is the U.S. Economy Quietly Rebounding?

June 3, 2025
Monday Macro View: Electric Fleets Keep Expanding, Even as Completions Slow

Monday Macro View: Electric Fleets Keep Expanding, Even as Completions Slow

June 2, 2025
Patterson UTI’s Perspective in Q1: KEY Takeaways

Patterson UTI’s Perspective in Q1: KEY Takeaways

June 2, 2025
Market Sentiment Tracker: Credit Card Delinquencies Hit 14-Year High

Market Sentiment Tracker: Credit Card Delinquencies Hit 14-Year High

May 27, 2025
Primary Vision

Established in 2011, we are renowned for our expert frac data and analytics, providing a rich array of unique indicators and industry commentary.

CONTACT

+1-713-554-4977
info@primaryvision.co

SOCIAL NETWORKS

POLICIES

Privacy Policy
Terms of Use

PARTNERS

Amazon Web Services

TRUSTED SITES

Logo

Logo

RECENT NEWS

SLB’s Perspective in Q1: KEY Takeaways

SLB’s Perspective in Q1: KEY Takeaways

June 6, 2025
Market Sentiment Tracker: Is the U.S. Economy Quietly Rebounding?

Market Sentiment Tracker: Is the U.S. Economy Quietly Rebounding?

June 3, 2025
Monday Macro View: Electric Fleets Keep Expanding, Even as Completions Slow

Monday Macro View: Electric Fleets Keep Expanding, Even as Completions Slow

June 2, 2025
Patterson UTI’s Perspective in Q1: KEY Takeaways

Patterson UTI’s Perspective in Q1: KEY Takeaways

June 2, 2025
Market Sentiment Tracker: Credit Card Delinquencies Hit 14-Year High

Market Sentiment Tracker: Credit Card Delinquencies Hit 14-Year High

May 27, 2025
  • HOME
  • ABOUT US
  • RESEARCH
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!

© 2025 Primary Vision. All rights reserved.

  • HOME
  • ABOUT US
    • ABOUT US
    • PRIMARY VISION AI INNOVATIONS
  • RESEARCH
    • INSIGHTS & ARTICLES
    • FREE ARTICLES
  • EVENTS
  • PRESS
  • SUPPORT
  • FAQ
  • LATEST NEWS
  • LOGIN
  • SIGN UP!
    • FRAC SPREAD COUNT SIGN-UP!
    • ENTERPRISE SUBSCRIPTION PLAN SIGN UP!

© 2025 Primary Vision. All rights reserved.