Does U.S. Well Services Deserve a Place in Your Portfolio?

: USWS | U.S. Well Services, Inc. News, Ratings, and Charts

USWS – The shares of hydraulic fracturing services company U.S. Well Services (USWS) have gained in percentage double digits in price over the past few months, thanks to skyrocketing oil prices. However, with declining revenues and bearish growth prospects, will USWS be able to maintain its momentum in the near term? Read on. Let’s discuss.

U.S. Well Services, Inc. (USWS) in Houston, Tex., provides hydraulic fracturing services for oil and natural gas exploration in the United States. The company is a pioneer in electric fracture stimulation, which significantly reduces emissions and increases operational efficiencies. It uses patented electric frac technology to drill crude oil and natural gas from wellheads across the U.S.

Shares of USWS have surged 22.3% in price over the past month as the escalating Russia-Ukraine tensions have driven oil prices to 14-year highs. However, as Russia and Ukraine hold multiple talks to end the conflict, oil prices fell by approximately $5 per barrel today. Oil prices also declined ahead of the Fed’s expected interest rate increase this week.

Shares of USWS have plummeted 34.9% in price over the past five days and 5.3% intraday to close Friday’s trading session at $1.15.

Here is what could shape USWS’ performance in the near term:

Declining Financials

For its fiscal third quarter, ended Sept. 30, 2021, USWS’ revenues increased 28.2% year-over-year to $56.48 million. However, the company’s loss from operations and loss before income taxes amounted to $7.76 million and $9.58 million, respectively. Its net loss attributable to USWS came in at $15.15 million, translating to a $0.50 loss per share.

Its adjusted EBITDA loss worsened 94.1% from the prior-year quarter to $466,000. And its net operating cash outflow for the nine months ended Sept. 30, 2021, came in at $20.25 million, compared to $19.09 million in operating cash inflow in the same period last year.

Share Capital Dilution

Earlier this month, USWS completed an at-the-market offering of 14.18 million shares at $1.76 each. The company simultaneously offered unregistered warrants to purchase an additional 14.18 million shares in a concurrent private placement offering. USWS raised $25 million in gross proceeds through this offering. It plans to use these funds to finance its working capital expenses and specific capital expenditures.

However, the equity issuance has significantly diluted USWS’ share capital, thereby reducing its EPS and ROE.

Bleak Growth Prospects

USWS has stated in its preliminary selected fiscal fourth quarter (ended December 31, 2021) financial and operating data update that its operations were significantly impacted by supply chain-driven downtime. The company expects its revenues to range between $38 million – $39 million, which is substantially lower than the $56.48 million in revenues it generated in the previous quarter. Also, the company expects its EBITDA loss to range between $6 million – $8 million, compared to  a $466,000 loss reported in the fiscal third quarter.

Unfavorable POWR Ratings

USWS has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a grade of F for Sentiment and Stability and a D for Quality. Analysts expect the company’s EPS to remain negative until at least this year, in sync with its  Sentiment grade. In addition, the stock’s relatively high 1.41 beta justifies the Stability grade. Furthermore, USWS’ negative net income margin and ROA justify the Quality grade.

Among the 41 stocks in the Energy – Services industry, USWS is ranked #34.

Beyond what I have stated above, view USWS ratings for Momentum, Value, and Growth here.

Bottom Line

USWS gained momentum over the past month due to surging oil prices. However, with many Republicans pushing for increased domestic drilling to combat skyrocketing oil and gas prices and Fed’s impending rate hike, oil prices are likely to remain under pressure in the near term. Furthermore, USWS’ operations are expected to be adversely impacted by worsening supply chain disruptions. Given this backdrop, we think the stock is best avoided now.

How Does U.S. Well Services (USWS) Stack Up Against its Peers?

While USWS has a D rating in our proprietary rating system, one might want to consider looking at its industry peers, Rex American Resources Corp. (REX) and North American Construction Group Ltd. (NOA), which have an A (Strong Buy) rating.


USWS shares fell $1.15 (-100.00%) in premarket trading Monday. Year-to-date, USWS has declined 0.00%, versus a -11.56% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
USWSGet RatingGet RatingGet Rating
REXGet RatingGet RatingGet Rating
NOAGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Stocks Racing to Bottom

The S&P 500 (SPY) has raced 15% lower in just a few short weeks. Sure we might see a short term bounce here or there. Unfortunately most signs still point lower. Why is that the case? How much lower could we go? And what is the best way to trade this market? 40 year investment veteran Steve Reitmeister provides the answers in his new market outlook below...

:  |  News, Ratings, and Charts

2 Stocks Under $50 Worth Snapping up Right Now

With the market volatility and odds of recession perpetually increasing with every interest rate hike by the Federal Reserve, investors would be advised to load up on attractively priced stocks of businesses with robust demand and stable growth trajectory. Hence, fundamentally sound stocks Kroger (KR) and APA (APA), currently trading under $50, could be ideal investments. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

:  |  News, Ratings, and Charts

The Worst Stock to Buy During Times of High Inflation

Rent the Runway (RENT) is slated to cut its workforce by 24% in the face of declining consumer spending amid soaring prices. Its subscriber count dropped in the last quarter. The stock has lost more than 70% year-to-date. Given the stubbornly high inflation, RENT might be best avoided. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

Read More Stories

More U.S. Well Services, Inc. (USWS) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All USWS News