Margin recovery without a fracturing rebound supports $2.90 of 2027 profit per share. At 13.5 times, that leaves 16% upside to $39.16.
Key points
- $5.70 billion of Q3 2026 revenue beat the plan as drilling growth offset soft fracturing demand.
- 12.8% Q3 2026 adjusted operating margin (profit share of sales) trails the 15% goal for 2027.
- $1.60 billion of 2026 free cash flow (cash left after equipment spending) funds buybacks as working capital normalizes.
The call
The shares look stuck in a low margin past. At $33.67 today the price values the business at about 11.6 times 2027 profit if margins recover only partly.
Quarterly revenue stuck near $5.7B ($ billions)SEC XBRL and Oct 20 2026 release; Q4 FY26E is company guide.
I see profit climbing without a fracturing rebound. Cost cuts plus new Middle East and Latin America contracts support about $2.90 of 2027 profit per share, which merits a higher price.
Target hinges on 2027 margin ($ per share)My arithmetic: $23.65B revenue, $0.45B interest, 22 pct tax, 820M shares, 13.5 times.
Valuation
| Item | Figure |
|---|
| 2027 revenue | $23.65 billion |
| 2027 operating profit at 14.8% | $3.50 billion |
| 2027 profit per share | $2.90 |
| 2027 multiple | 13.5 times |
| Target | $39.16 a share |
A 13.5 times multiple (price divided by profit per share) fits a cyclical service leader with rising margins. The multiple sits below past upcycle peaks near 18 times. If 2027 margins stall near 13.5% the stock holds near $35.20 in 2027, so upside outweighs downside for a buy.
Risks
- North America fracturing demand stays weak and pricing slips further, which would show in lower fleet use and weaker Completion revenue in early 2027.
- Middle East startups face delays and cost inflation, which would show in flat regional revenue and rising receivables and inventory through 2027.
- Oil prices fall near $70 per barrel and customers cut budgets, which would show in falling rig counts and slower contract awards through 2027.
What would change my mind
I would turn cautious if cost savings stall and new contracts fail to lift margins above 13.5% by mid 2027.