We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why You Should Buy Oil Service Provider Liberty Energy (LBRT)
Read MoreHide Full Article
Even as fears revolving around high inflation and slowing growth somewhat cloud the outlook for Oil/Energy, it has remained the best S&P 500 sector this year. The space has generated a total return of more than 50% in 2022 against the S&P 500’s loss of around 24%.
Apart from a positive fundamental picture, the sector is enjoying support from geopolitical uncertainty amid Russia’s military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity.
While oil has pulled back from those lofty levels, with the conflict showing no sign of a quick resolution, the risk of dwindling inventory and the influential oil exporters’ group OPEC agreeing on a production curtailment means that the commodity has got enough reasons to stay elevated in the near-to-medium term. Naturally, some stocks have been impressive since the start of the year. These also have strong earnings trends to back up their moves.
One such company is Liberty Energy (LBRT - Free Report) . Previously known as Liberty Oilfield Services, it is a premier provider of hydraulic fracturing and other auxiliary services to onshore exploration and production (E&P) companies in North America. The Denver, CO-based independent, pure play operates in the Permian Basin, the Eagle Ford Shale, the Denver-Julesburg (“DJ”) Basin, the Williston Basin, the San Juan Basin, the Powder River Basin, the Haynesville Shale, the Oklahoma Scoop and Stack areas, the Marcellus Shale, Utica Shale, and the Western Canadian Sedimentary Basins.
Let’s discuss the reasons that make Liberty Energy an attractive pick:
Solid Rank and VGM Score
Liberty Energy is a Zacks Rank #1 (Strong Buy) stock in the Oil and Gas - Field Services industry, which carries a Zacks Industry Rank #34 — placing it in the top 14% of more than 250 Zacks industries. In addition to the favorable rank, LBRT enjoys a Zacks Value Style Score of B Growth of A, and an overall VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Earnings Smash Estimtes in Q2
LBRT posted excellent Q2 results on Jul 25, with EPS of 55 cents handily beating the Zacks Consensus Estimate of 18 cents and almost doubling from the year-earlier bottom line of 29 cents. The firm’s outperformance reflects the impact of strong execution, higher activity and increased service pricing, which more than offset rising costs. Total revenues came in at $942.6 million, ahead of the Zacks Consensus Estimate of $875 million and 62.2% above the year-ago level of $581.3 million.
Current Levels Are a Buying Opportunity
After LBRT shares bottomed out (around $2.20) during the start of the pandemic, they have turned it around in style. Liberty Energy peaked in April at over $20 but has fallen to under $15 since then. Despite this drop, the stock is still up almost 54% on the year while the markets have gone lower.
This powerful uptrend during a bear market indicates that investors should take advantage of the discounted levels and start looking at the name to see if it’s right for their portfolio. With the company experiencing the best market conditions in years, we believe that the LBRT stock has enough firepower left to keep chugging along.
Image Source: Zacks Investment Research
Analyst Estimates Raised
PTEN’s earnings revisions have also trended in the right direction over the last 90 days, as analysts have consistently taken up their numbers. As a matter of fact, the Zacks Consensus Estimate for Liberty Energy’s 2022 bottom line has jumped from a profit of 68 cents to a profit of $1.76 during this timeframe, while next year’s number is a rise from a profit of $1.59 per share to $2.73.
Fundamental Strength
Liberty Energy offers hydraulic fracturing services to the onshore upstream energy companies across multiple basins in North America. With technological progress in shale oil production, increased rig efficiencies and higher well complexity, drillers of oil and gas wells require extensive solutions for mapping underground reservoirs. This translates into an ever-expanding domain of work for oilfield service companies like LBRT.
The company already had a strong position in the oilfield service space, which has been further complemented by the OneStim acquisition. Apart from revenues and cost synergies, the transaction broadened Liberty’s geographic footprint by putting it into the Haynesville, Mid-Continent, and Canada. Further, the company added Schlumberger’s Permian frac sand business, plus pump down perforating wireline operations in the Marcellus and Utica.
Bottom Line
The current scenario makes this a solid time to consider buying Liberty Energy. Yes, there are some apprehensions that the company may feel reverberating impacts from the inflation-triggered cost increases. But with crude demand set to remain robust and eventually surpass the pre-COVID record, most of the domestic fracking capacity is on the verge of being exhausted.
In this context, Liberty management sees elevated demand for its reactivated fleet that supports clients’ long-term development plans. All these suggest strong long-term cash flows that should support higher price points for its shares.
Other Energy Stocks to Buy
Along with Liberty Energy, investors interested in the energy sector might look at Chesapeake Energy (CHK - Free Report) , Murphy USA (MUSA - Free Report) and Marathon Petroleum (MPC - Free Report) , each currently sporting a Zacks Rank #1.
Chesapeake Energy: Chesapeake is valued at some $12.3 billion. The Zacks Consensus Estimate for CHK’s 2022 earnings has been revised 12.3% upward over the past 60 days.
Chesapeake, headquartered in Oklahoma City, delivered a 30.2% beat in Q2. CHK shares have surged 62.4% in a year.
Murphy USA: Murphy USA is valued at some $6.7 billion. The Zacks Consensus Estimate for MUSA’s 2022 earnings has been revised 14% upward over the past 60 days.
Murphy USA, headquartered in El Dorado, AR, has a trailing four-quarter earnings surprise of 49%, on average. MUSA shares have gained 62.4% in a year.
Marathon Petroleum: MPC beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 56.7%, on average.
Marathon Petroleum is valued at around $54.4 billion. MPC has seen its shares gain 63.2% in a year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why You Should Buy Oil Service Provider Liberty Energy (LBRT)
Even as fears revolving around high inflation and slowing growth somewhat cloud the outlook for Oil/Energy, it has remained the best S&P 500 sector this year. The space has generated a total return of more than 50% in 2022 against the S&P 500’s loss of around 24%.
Apart from a positive fundamental picture, the sector is enjoying support from geopolitical uncertainty amid Russia’s military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity.
While oil has pulled back from those lofty levels, with the conflict showing no sign of a quick resolution, the risk of dwindling inventory and the influential oil exporters’ group OPEC agreeing on a production curtailment means that the commodity has got enough reasons to stay elevated in the near-to-medium term.
Naturally, some stocks have been impressive since the start of the year. These also have strong earnings trends to back up their moves.
One such company is Liberty Energy (LBRT - Free Report) . Previously known as Liberty Oilfield Services, it is a premier provider of hydraulic fracturing and other auxiliary services to onshore exploration and production (E&P) companies in North America. The Denver, CO-based independent, pure play operates in the Permian Basin, the Eagle Ford Shale, the Denver-Julesburg (“DJ”) Basin, the Williston Basin, the San Juan Basin, the Powder River Basin, the Haynesville Shale, the Oklahoma Scoop and Stack areas, the Marcellus Shale, Utica Shale, and the Western Canadian Sedimentary Basins.
Let’s discuss the reasons that make Liberty Energy an attractive pick:
Solid Rank and VGM Score
Liberty Energy is a Zacks Rank #1 (Strong Buy) stock in the Oil and Gas - Field Services industry, which carries a Zacks Industry Rank #34 — placing it in the top 14% of more than 250 Zacks industries. In addition to the favorable rank, LBRT enjoys a Zacks Value Style Score of B Growth of A, and an overall VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Earnings Smash Estimtes in Q2
LBRT posted excellent Q2 results on Jul 25, with EPS of 55 cents handily beating the Zacks Consensus Estimate of 18 cents and almost doubling from the year-earlier bottom line of 29 cents. The firm’s outperformance reflects the impact of strong execution, higher activity and increased service pricing, which more than offset rising costs. Total revenues came in at $942.6 million, ahead of the Zacks Consensus Estimate of $875 million and 62.2% above the year-ago level of $581.3 million.
Current Levels Are a Buying Opportunity
After LBRT shares bottomed out (around $2.20) during the start of the pandemic, they have turned it around in style. Liberty Energy peaked in April at over $20 but has fallen to under $15 since then. Despite this drop, the stock is still up almost 54% on the year while the markets have gone lower.
This powerful uptrend during a bear market indicates that investors should take advantage of the discounted levels and start looking at the name to see if it’s right for their portfolio. With the company experiencing the best market conditions in years, we believe that the LBRT stock has enough firepower left to keep chugging along.
Image Source: Zacks Investment Research
Analyst Estimates Raised
PTEN’s earnings revisions have also trended in the right direction over the last 90 days, as analysts have consistently taken up their numbers. As a matter of fact, the Zacks Consensus Estimate for Liberty Energy’s 2022 bottom line has jumped from a profit of 68 cents to a profit of $1.76 during this timeframe, while next year’s number is a rise from a profit of $1.59 per share to $2.73.
Fundamental Strength
Liberty Energy offers hydraulic fracturing services to the onshore upstream energy companies across multiple basins in North America. With technological progress in shale oil production, increased rig efficiencies and higher well complexity, drillers of oil and gas wells require extensive solutions for mapping underground reservoirs. This translates into an ever-expanding domain of work for oilfield service companies like LBRT.
The company already had a strong position in the oilfield service space, which has been further complemented by the OneStim acquisition. Apart from revenues and cost synergies, the transaction broadened Liberty’s geographic footprint by putting it into the Haynesville, Mid-Continent, and Canada. Further, the company added Schlumberger’s Permian frac sand business, plus pump down perforating wireline operations in the Marcellus and Utica.
Bottom Line
The current scenario makes this a solid time to consider buying Liberty Energy. Yes, there are some apprehensions that the company may feel reverberating impacts from the inflation-triggered cost increases. But with crude demand set to remain robust and eventually surpass the pre-COVID record, most of the domestic fracking capacity is on the verge of being exhausted.
In this context, Liberty management sees elevated demand for its reactivated fleet that supports clients’ long-term development plans. All these suggest strong long-term cash flows that should support higher price points for its shares.
Other Energy Stocks to Buy
Along with Liberty Energy, investors interested in the energy sector might look at Chesapeake Energy (CHK - Free Report) , Murphy USA (MUSA - Free Report) and Marathon Petroleum (MPC - Free Report) , each currently sporting a Zacks Rank #1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Chesapeake Energy: Chesapeake is valued at some $12.3 billion. The Zacks Consensus Estimate for CHK’s 2022 earnings has been revised 12.3% upward over the past 60 days.
Chesapeake, headquartered in Oklahoma City, delivered a 30.2% beat in Q2. CHK shares have surged 62.4% in a year.
Murphy USA: Murphy USA is valued at some $6.7 billion. The Zacks Consensus Estimate for MUSA’s 2022 earnings has been revised 14% upward over the past 60 days.
Murphy USA, headquartered in El Dorado, AR, has a trailing four-quarter earnings surprise of 49%, on average. MUSA shares have gained 62.4% in a year.
Marathon Petroleum: MPC beat the Zacks Consensus Estimate for earnings in each of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 56.7%, on average.
Marathon Petroleum is valued at around $54.4 billion. MPC has seen its shares gain 63.2% in a year.