ProPetro Holding Corporation provides oilfield services. The company offers hydraulic fracturing and other complementary services, including cementing, acidizing, coiled tubing, flowback, and surface air drilling services to upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources in the Permian Basin. The company was founded in 2007 and is based in Midland, Texas.
PUMP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for ProPetro Holding Corp with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that ProPetro Holding Corp ranked in the 23th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. In terms of the factors that were most noteworthy in this DCF analysis for PUMP, they are:
Its compound free cash flow growth rate, as measured over the past 1.68 years, is -0.21% -- higher than only 7.55% of stocks in our DCF forecasting set.
ProPetro Holding Corp's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -12.43. This coverage rate is greater than that of merely 7.38% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Energy), ProPetro Holding Corp has a reliance on debt greater than merely 1.63% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
COG, PBA, AROC, PNRG, and HFC can be thought of as valuation peers to PUMP, in the sense that they are in the Energy sector and have a similar price forecast based on DCF valuation.
PUMP's Margin Can Weaken Source ProPetro Holding Corp. (PUMP) plans to increase fully utilized frac fleet deployment in Q3 compared to the Q2-average. Its ten-year contract with PXD following an asset acquisition transaction will serve as a cushion against the dip in activity and utilization. However, the delay in using...
Badsha Chowdhury on Seeking Alpha | August 20, 2020