Liberty Energy Inc (LBRT, Financial) has recently experienced a daily gain of 4.96% and a 3-month gain of 38.46%. With an Earnings Per Share (EPS) (EPS) of 3.37, is this stock modestly undervalued? To answer this question, we delve into a comprehensive valuation analysis of Liberty Energy (LBRT).
Liberty Energy Inc (LBRT, Financial): A Company Overview
Liberty Energy is an oilfield services company that provides hydraulic fracturing services, primarily pressure pumping, across major basins in North America. Its 2020 acquisition of Schlumberger's OneStim business segment positioned Liberty Energy as one of the largest pressure pumpers in North America. This acquisition also introduced wireline operations, two Permian frac sand mines, and an expanded technological portfolio to the company.
With a current stock price of $18.62 and a market cap of $3.20 billion, Liberty Energy's GF Value, an estimate of fair value, stands at $23.66. This GF Value suggests that Liberty Energy's stock is modestly undervalued.
Understanding GF Value
The GF Value is a unique measure of a stock's intrinsic value. It is derived from historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally be traded.
According to GuruFocus Value calculation, Liberty Energy's stock is estimated to be modestly undervalued. This suggests that the long-term return of its stock is likely to be higher than its business growth.
Financial Strength of Liberty Energy
Assessing the financial strength of a company is crucial before investing in its stock. Companies with poor financial strength pose a higher risk of permanent loss. Liberty Energy's cash-to-debt ratio stands at 0.07, which is lower than 83.56% of 1034 companies in the Oil & Gas industry. Despite this, the overall financial strength of Liberty Energy is fair, with a score of 7 out of 10.
Profitability and Growth of Liberty Energy
Investing in profitable companies is less risky, especially those demonstrating consistent profitability over the long term. Liberty Energy has been profitable for 3 years over the past 10 years, with revenues of $4.90 billion and an EPS of $3.37 in the past 12 months. Its operating margin of 16.59% is better than 63.01% of 984 companies in the Oil & Gas industry.
Liberty Energy's growth is another important factor to consider. Its 3-year average revenue growth rate is lower than 60.56% of 862 companies in the Oil & Gas industry. However, its 3-year average EBITDA growth rate of 15.1% ranks better than 51.39% of 829 companies in the same industry.
ROIC Vs WACC
Comparing a company's return on invested capital (ROIC) and the weighted average cost of capital (WACC) can provide insights into its profitability. Liberty Energy's ROIC stands at 35.81, and its WACC is 9.94 for the past 12 months.
Conclusion
In conclusion, Liberty Energy's stock is estimated to be modestly undervalued. The company's financial condition is fair, and its profitability is also fair. Its growth ranks better than 51.39% of 829 companies in the Oil & Gas industry. For a more detailed financial analysis of Liberty Energy, you can check out its 30-Year Financials here.
To find out high-quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
