Valens Equity Weekly Insights and Inflections for April 26, 2022
- Liberty Oilfield Services (LBRT) is a well-positioned vertically integrated, pure play U.S. shale E&S company. Uniform Accounting highlights the company’s profitability potential during a strong shale cycle that the market is missing, indicating equity upside is warranted.
- Liberty spent the last several years consolidating the U.S. shale completions market, positioning itself to benefit from a surge shale production. With Russian oil coming off the market and oil demand recovering from the pandemic, Uniform ROA could accelerate back to cycle peak levels, which the market is not pricing in at all.
- Liberty’s management is aligned to focus on Adjusted pre-tax EPS and ROCE, which will lead management to profitably grow the business while also focusing on smart asset deployment. These metrics should drive strong ROA performance.
- Management confidence in the Q4 earnings call about their fleet and about oil demand support ROA expansion and continued growth.