ProPetro is simple - falling CAPEX, stable demand and changing capital allocation strategy drives significant shareholder value from here. It’s similar in nature to prior investments such as Builders First Source or Alpha Metallurgical Resources in that the multiple is very low (6.5x this years FCF, 4.9x 2025), clean balance sheet, bolt on accretive M&A and a recognition that the equity is a very attractive investment leading to significant buybacks in the years ahead as FCF grows.
“we believe that our stock presents a unique, high return investment opportunity due to the substantial discrepancy between our equity value and our financial results." - Sam Sledge, ProPetro CEO
The risk for this investment seems to be opportunity cost if the shares didn’t appreciate significantly - mainly due to the buffer falling CAPEX will have and the depressed valuation the company trades at while the reward is significant appreciation in the equity if the company can execute on the capital allocation strategy.
Let’s dissect the business opportunity!
Table of Contents
Business Overview
Capital Allocation
Market Demand Dynamics
Financial Strength
Valuation & Expectations
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