This Oil Services Stock Can Gain 50%+

Oct 31, 2024

∙ Paid

💡 Highlights

Oilfield services provider Weatherford International (WFRD) has transformed from bankruptcy to a disciplined industry leader, yet trades at just 4.8x EBITDA - a steep discount to peers.
Originally founded in 1941, it grew through aggressive M&A but suffered from poor integration and high debt, leading to its eventual Chapter 11 filing when oil prices collapsed.
Under CEO Grish Saligram, the company has achieved dramatic margin improvement from below 10% in 2017 to approximately 25% currently. The improvement stems from better integration of historical acquisitions and operational discipline - not just industry tailwinds.
More than 80% of revenue comes from outside the U.S., with strong relationships with state-owned oil companies like Petrobras and Saudi Aramco. This international focus could be advantageous given a strong outlook for offshore drilling.
$350M in free cash flow generated just this year equates to 6% of market cap and opens the door to return cash to shareholders. Management has initiated a dividend program and a $500M share repurchase plan (representing over 8% of shares outstanding).
While investors remain skeptical due to its troubled history, WFRD has clearly broken free from its past under new leadership. We see potential for 50%+ upside through reasonable assumptions of multiple expansion and earnings growth. Let’s take a deeper look…