Based in London, the U.K, TechnipFMC plc (FTI) is engaged in oil and gas projects, technologies, and systems and services businesses. Its revenue decreased 4.8% year-over-year to $1.52 billion for the fourth quarter, ended Dec.31, 2021. The company’s adjusted loss came in at $55.8 million, representing a 103.6% year-over-year increase, while its adjusted loss per share was $0.12, up 100% year-over-year. Furthermore, FTI’s 14.75% trailing twelve-month gross profit margin is lower than the 39.02% industry average. Also, its 1.26% trailing-twelve-month return on total assets is lower than the 1.98% industry average.
The stock has declined 12.3% in price over the past year, to close yesterday’s trading session at $6.66. On Feb. 18, 2022, FTI announced the completion of delisting of its shares on Euronext Paris. Also, in terms of forward EV/EBIT, its 16.99x is 37.5% higher than the 12.36x industry average. In addition, its 6.30x forward P/CF is 17.1% higher than the 5.38x industry average. So, the stock looks overvalued.
However, certain oil and gas equipment and services stocks are expected to be good bets due to their solid revenue and cash flow generation. While the industry is expected to witness several supply-related challenges, including a continued decline in discoveries, soaring oil and gas prices should keep driving demand, according to Expert Market Research, the global oil and gas field equipment and services market is projected to grow at a 6.5% CAGR to $380 billion by 2026. Therefore, we think investors looking to benefit from the overall industry’s growth could bet on quality stocks Schlumberger Limited (SLB), ChampionX Corporation (CHX), Oceaneering International, Inc. (OII), and MRC Global Inc. (MRC) instead.
Schlumberger Limited (SLB)
Paris, France-based SLB provides technology for the energy industry worldwide. The company operates through four divisions: Digital & Integration; Reservoir Performance; Well Construction; and Production Systems.
On January 21, 2022, SLB CEO Olivier Le Peuch said , “Strengthening activity, accelerating digital sales, and outstanding free cash flow performance combined to deliver another quarter of remarkable financial results to close the year with great momentum.”
SLB’s revenue increased 12.5% year-over-year to $6.22 billion for the fourth quarter, ended Dec. 31, 2021. Its net income came in at $601 million, up 60.7% year-over-year, while its EPS came in at $0.42, up 55.6% year-over-year.
For its fiscal year 2022, SLB’s revenue is expected to increase 15.4% year-over-year to $23.41 billion, and its EPS is expected to grow 36.4% per annum for the next five years. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 30.3% in price to close yesterday’s trading session at $38.32.
SLB has an overall B rating, equating to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
It has a B grade for Growth, Momentum, and Quality. It is ranked #9 of 42 stocks in the Energy - Services industry. Click here to see the additional POWR Ratings for SLB (Value, Sentiment, and Stability).
ChampionX Corporation (CHX)
CHX in The Woodlands, Tex., provides chemistry solutions and engineered equipment and technologies to oil and gas companies worldwide. Its segments are Production Chemical Technologies; Production & Automation Technologies; Drilling Technologies, and Reservoir Chemical Technologies.
On Feb. 9, 2022, CHX’s President and CEO, Sivasankaran “Soma” Somasundaram, said, “While we expect raw material availability and global supply chain bottlenecks to constrain growth somewhat in the first half of 2022, we are confident that we will deliver positive top-line and bottom-line growth, with significant margin expansion for the full year, targeting an exit 2022 adjusted EBITDA margin rate of 18%. ChampionX is well positioned within the evolving energy industry, and I am humbled and honored to lead our remarkably motivated and talented team.”
For its fourth quarter, ended Dec.31, 2021, CHX’s revenue increased 16.4% year-over-year to $822.14 million. The company’s net income came in at $43.45 million, up 490.6% year-over-year, while its EPS increased 425% year-over-year to $0.21.
CHX’s revenue is expected to be $3.45 billion in its fiscal 2022, representing a 12.2% year-over-year rise. In addition, the company’s EPS is expected to increase 56.4% per annum for the next five years. The stock closed yesterday’s trading session at $21.12.
It’s no surprise that CHX has an overall B rating, which equates to a Buy in our POWR Rating system. The stock has a B grade for Momentum and Quality.
It is ranked #6 in the Energy - Services industry. Click here to see the additional POWR Ratings for CHX (Growth, Value, Stability, and Sentiment).
Oceaneering International, Inc. (OII)
OII provides engineered services and products to the offshore oil and gas, defense, aerospace, and commercial theme park industries worldwide. Its segments are Subsea Robotics; Manufactured Products; Projects Group; Integrity Management & Digital Solutions, and Aerospace and Defense Technologies. OII is based in Houston, Tex.
On Feb.24, 2022, Roderick A. Larson, President and CEO, OII, said, “I am pleased with our achievements in 2021 as our $211 million of adjusted EBITDA achieved the top end of the adjusted EBITDA guidance range provided at the beginning of the year and exceeded the guidance mid-point by 14%. Except for Manufactured Products, which is tied to longer-cycle market drivers, all of our operating segments delivered improved sequential annual operating results in 2021.”
OII’s revenue for the fourth quarter, ended Dec. 31, 2021, came in at $466.71 million, up 10% year-over-year. Its gross margin increased 75.9% year-over-year to $79.16 million. The company’s current assets were $1.19 billion for the period ended Dec. 31, 2021, compared to $1.17 billion for the period ended Dec. 31, 2020.
Analysts expect OII’s revenue to increase 9% to $2.04 billion in 2022. Its EPS is estimated to increase 119.5% per annum for the next five years. Over the past year, the stock has gained 35.5% in price to close yesterday’s trading session at $14.77.
OII’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system.
It has a B grade for Momentum and Quality. Within the Energy - Services industry, it is ranked #8. Click here to see the additional POWR Ratings for Growth, Value, Sentiment, and Stability for OII.
MRC Global Inc. (MRC)
Houston. Tex.-based MRC, through its subsidiaries, distributes pipes, valves, fittings, and other infrastructure products and services to the energy, industrial, and gas utility end markets in the United States, Canada, and internationally.
On Feb. 15, 2022, Rob Saltiel, MRC’s president and CEO, said, “In 2022, we expect all four of our U.S. end-market sectors to achieve double-digit revenue growth and for our Canada and International segments to each deliver revenue and adjusted EBITDA above 2021 levels. For the company as a whole, we are targeting at least $3 billion of revenue and $190 million of adjusted EBITDA. We believe there is potential for outperformance if capital spending levels exceed forecasted levels for our major customers.”
MRC’s sales for the fourth quarter, ended Dec. 31, 2021, came in at $686 million, up 18.5% year-over-year. Its net loss decreased 9.1% year-over-year to $10 million, while its loss per share decreased 7.7% year-over-year to $0.12.
Analysts expect MRC’s revenue to increase 13.4% to $3.02 billion in its fiscal year 2022. Its EPS is estimated to increase 32.2% to $1.15 in 2023. It surpassed EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 24% in price to close yesterday’s session at $9.55.
MRC has an overall B rating, which equates to a Buy in our POWR Ratings system. It has an A grade for Growth and a B grade for Momentum and Sentiment. Click here to check additional ratings for MRC (Value, Stability, and Quality). It is ranked #7 in the Energy - Services industry.
SLB shares were trading at $39.33 per share on Friday afternoon, up $1.01 (+2.64%). Year-to-date, SLB has gained 31.73%, versus a -8.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
Forget TechnipFMC, Buy These 4 Energy Service Stocks Instead StockNews.com
