For example, S&P Capital IQ has strong sell ratings on Diamond Offshore (NYSE: DO); which cut its dividend, Nabors Industries (NYSE: NBR), Patterson-UTI Energy (NasdaqGS: PTEN), as well as two companies in the oil & gas equipment & services sub-industry – Basic Energy Services (NYSE: BAS) and Superior Energy Services (NYSE: SPN).[Momentum for an Oil Services ETF]
Nabors and Patterson-UTI are top 10 holdings in the XES four of the aforementioned stocks, excluding Basic Energy Services, combine for 10.3% of the ETF’s weight.
“In the case of the energy equipment & services industry, first-quarter 2015 forward EV/EBITDA valuation was about 8% above the average since 2009, which we think suggests that stock prices have retreated by relatively less than EBITDA estimates have declined. Meanwhile, in the case of the broader energy sector, first-quarter 2015 forward EV/EBITDA valuation was about 48% above the average since 2009, which we think points to EBITDA estimates being slashed by a far greater degree than stock prices,” according to S&P Capital IQ.
SPDR Oil & Gas Equipment & Services ETF
