The energy sector is poised for substantial growth this year, driven by escalating global demand and heightened oil prices amid ongoing tensions in the Middle East. Furthermore, production cuts by major oil producers and China’s economic rebound should support the industry’s expansion.

Amid this backdrop, it could be worth investing in energy stocks TechnipFMC plc (FTI), Weatherford International plc (WFRD), and ChampionX Corporation (CHX).

The recent attacks by Ukraine on Russian refineries led to oil prices surging to multi-month highs, with potential disruptions in production causing short-term supply shortages and market uncertainty.

In the last two months, oil prices have shown a positive trajectory due to OPEC+ extending voluntary output cuts by 2.2 million bpd through Q2, bolstered by Russia’s additional cut of 417 thousand bpd.

OPEC’s recent monthly report forecasts a 2.25 million bpd increase in global oil demand for 2024 and a 1.85 million bpd rise for 2025. Moreover, the group has revised its economic growth prediction for this year upwards, expecting a 2.8% global economic growth in 2024, which is anticipated to increase oil demand.

Considering these conducive trends, let’s analyze the fundamentals of the featured energy stocks.

TechnipFMC plc (FTI)

FTI engages in international energy projects, technologies, and systems and services businesses. It operates through two segments: Subsea and Surface Technologies.

On March 15, 2024, FTI announced being chosen by NEP to deliver the first all-electric iEPCI for carbon capture and storage, using an integrated approach and innovative technology to streamline infrastructure and installation processes, with the full contract contingent on regulatory approvals and final investment decision anticipated by late 2024.

On February 15, 2024, FTI announced a major contract with Shell for the first iEPCI project, which used high-pressure subsea production systems for up to 20,000 psi. This involves manufacturing and installing various subsea components for Shell’s Sparta development in the Gulf of Mexico, demonstrating advanced technology and an integrated approach for better project efficiency.

In terms of the trailing-12-month levered FCF margin, FTI’s 10.79% is 78.2% higher than the 6.05% industry average. Likewise, the stock’s 0.80x trailing-12-month asset turnover ratio is 54.6% higher than the industry average of 0.52x.

FTI’s revenues for the fourth quarter ended December 31, 2023, increased 22.6% year-over-year to $2.08 billion. Similarly, its adjusted EBITDA reached $218.70 million, marking an 80.9% year-over-year increase.

For the same quarter, FTI’s adjusted net income and adjusted EPS stood at $62.70 million and $0.14, compared to an adjusted net loss and adjusted loss per share of $20.70 million and $0.05, respectively.

Street expects FTI’s revenue for the quarter ending March 31, 2024, to increase 15.4% year-over-year to $1.98 billion. Its EPS for the quarter ending June 30, 2024, is expected to increase 203.7% year-over-year to $0.30. Over the past year, the stock has gained 93.8%, closing the last trading session at $25.33.

FTI’s POWR Ratings reflect its solid prospects. It has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It is ranked #14 out of 50 stocks in the Energy – Services industry. It has an A grade for Growth and a B for Momentum. Click here for the other FTI ratings for Value, Stability, Sentiment, and Quality.

Weatherford International plc (WFRD)

WFRD is an energy services company that provides equipment and services for drilling, evaluating, completing, producing, and intervening in oil, geothermal, and natural gas wells worldwide. The company operates through three segments: Drilling and Evaluation; Well Construction and Completions; and Production and Intervention.

On December 6, 2023, WFRD announced securing a five-year contract with Petrobras in Brazil for Drill Pipe Riser (DPR) ultra-deepwater offshore intervention systems and services, beginning in March 2025.

This highlights their advanced Intervention Workover Control Systems (IWOCS) and digital solutions via the Centro platform, strengthening their collaboration with Petrobras.

In terms of the trailing-12-month Return on Common Equity, WFRD’s 57.16% is 228.5% higher than the 17.40% industry average. Its 1.05x trailing-12-month asset turnover ratio is 102.1% higher than the 0.52x industry average. Additionally, its 17.25% trailing-12-month Return on Total Capital is 109.3% higher than the industry average of 8.24%.

WFRD’s total revenues for the fiscal fourth quarter ended December 31, 2023, increased 12.7% from the year-ago value to $1.36 billion. Its operating income grew 27.8% year-over-year to $216 million.

The company’s net income attributable to WFRD and adjusted net income per share grew 94.4% and 91.9% over the prior-year quarter to $140 million and $1.90, respectively. Additionally, its adjusted free cash flow rose 84.2% from the year-ago value to $315 million.

Analysts expect WFRD’s EPS and revenue for the quarter ending March 31, 2024, to increase 51.3% and 11.6% year-over-year to $1.47 and $1.32 billion, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has gained 106.6% to close the last trading session at $116.49.

WFRD’s positive outlook is reflected in its POWR Ratings. Its overall rating is B, which equates to a Buy in our proprietary rating system.

It has a B grade for Growth, Momentum, and Quality and is ranked #10 out of 83 stocks in the Energy – Oil & Gas industry. To see WFRD’s Value, Stability, and Sentiment ratings, click here.

ChampionX Corporation (CHX)

CHX provides chemistry solutions, engineered equipment, and technologies to oil and gas companies worldwide. The company operates through four segments: Production Chemical Technologies, Production & Automation Technologies, Drilling Technologies, and Reservoir Chemical Technologies.

On March 22, 2024, CHX revealed its intention to buy RMSpumptools Limited for about £86 million ($108.56 million), strengthening its global presence in offshore production technologies. This move will enhance CHX’s Production and Automation Technologies portfolio, providing advanced solutions for artificial lift applications and ultimately increasing customer value and revenue prospects.

CHX’s CEO, Sivasankaran Somasundaram, expects the RMSpumptools acquisition to boost growth in the Middle East and offshore markets by complementing CHX’s technologies, ultimately delivering more value to customers and stakeholders.

On February 27, 2024, CHX acquired Artificial Lift Performance Limited (ALP), a provider of advanced analytics solutions for oil and gas production, to expand its digital solutions portfolio.

This acquisition aims to offer end-to-end digital solutions, combining ALP’s Pump Checker software with CHX’s XSPOC production optimization software for comprehensive analytics across major artificial lift types, enhancing customer productivity and profitability.

In terms of the trailing-12-month Return on Total Assets, CHX’s 9.69% is 45.6% higher than the 6.66% industry average. Likewise, its 11.71% trailing-12-month levered FCF margin is 93.4% higher than the industry average of 6.05%. The stock’s 18.64% trailing-12-month Return on Common Equity is 7.2% higher than the industry average of 17.40%.

For the fourth quarter, which ended on December 31, 2023, CHX’s revenue amounted to $943.56 million. The company’s adjusted EBITDA came in at $198.15 million, up 10.4% from the prior year’s period. Its adjusted net income attributable to CHX was $86.30 million. Moreover, its adjusted EPS attributable to CHX rose 2.3% year-over-year to $0.44.

For the quarter ending March 31, 2024, CHX’s EPS is expected to increase 14.2% year-over-year to $0.41. Its revenue for the quarter ending June 30, 2024, is expected to increase 3.6% year-over-year to $959.68 million. Over the past year, the stock has gained 37.8% to close the last trading session at $35.45.

CHX’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system.

It has a B grade for Growth, Momentum, and Quality. Within the Energy – Services industry, it is ranked #10 out of 50 stocks. In total, we rate CHX on eight different levels. Beyond what we stated above, we also have given CHX grades for Value, Stability, and Sentiment. Get all the CHX ratings here.

What To Do Next?

43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.

2024 Stock Market Outlook >

FTI shares were unchanged in premarket trading Thursday. Year-to-date, FTI has gained 26.03%, versus a 10.34% rise in the benchmark S&P 500 index during the same period.

About the Author: Abhishek Bhuyan

Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More...

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