Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.8 |
| EV/EBITDA | 8.6 |
| Fwd P/E | 1.0 |
| PEG | 8.6 |
| Analyst target | 7.5 |
- ▸Forward P/E: 96.4x
- ▸PEG: 0.73
- ▸Attractively valued
PTEN · Why this verdict
Why Patterson-UTI Energy (PTEN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Patterson-UTI Energy faces declining revenue of -13%, business quality below the minimum investable threshold at 2.0/10, and customer concentration where the ten largest customers represent 57% of revenue, creating a fragile setup despite a favorable EV/EBITDA valuation and recent technical support signals.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The dividend yield is flagged at 375% of earnings, signaling a dividend that is deeply uncovered by current net income, creating a high probability of a dividend cut that would disappoint income-oriented investors. Catalyst breakdown | Earnings recover sufficiently to cover the dividend at below 100% of net income within 4 quarters. | →Stable |
| CounterCompanies in cyclical downturns often temporarily pay dividends out of free cash flow or balance sheet resources rather than cutting, which can sustain the payout longer than earnings alone would suggest. | ||
Ten customers represent 57% of total revenue, creating significant revenue concentration risk where the loss of even one or two major clients could materially reduce earnings in any given quarter. Bear case | Customer concentration falls below 50% within 24 months as the company diversifies its client base. | →Stable |
| CounterHigh customer concentration is common in the oilfield services industry, and long-term drilling contracts with major operators provide revenue visibility that partly offsets the concentration risk. | ||
Revenue has declined 13% year over year and business quality scores at 2.0/10, reflecting near-zero gross margins, negative net income, and a forward P/E of 108x that reflects minimal near-term earnings power. Quality breakdown | Revenue decline rate improves to less than -5% year over year within 2 quarters as rig count stabilizes. | →Stable |
| CounterThe PEG ratio is 0.81 on a longer-term earnings basis, suggesting that if the oil and gas drilling cycle recovers, the stock could see significant multiple expansion. | ||
The stock shows an extreme gap down of -6.9% that the data characterizes as a potential reversal signal, trades above its 200-day moving average, and the RSI at 37 is in pullback territory within what may still be an uptrend. Technical breakdown | Price rises above $11.47 resistance within 6 months following the gap recovery. | →Stable |
| CounterVolume distribution shows falling OBV, which contradicts the gap reversal signal and suggests institutional sellers are still active on any price bounce. | ||
The dividend yield is flagged at 375% of earnings, signaling a dividend that is deeply uncovered by current net income, creating a high probability of a dividend cut that would disappoint income-oriented investors.
→StableCatalyst breakdown
- Expectation
- Earnings recover sufficiently to cover the dividend at below 100% of net income within 4 quarters.
CounterCompanies in cyclical downturns often temporarily pay dividends out of free cash flow or balance sheet resources rather than cutting, which can sustain the payout longer than earnings alone would suggest.
Ten customers represent 57% of total revenue, creating significant revenue concentration risk where the loss of even one or two major clients could materially reduce earnings in any given quarter.
→StableBear case
- Expectation
- Customer concentration falls below 50% within 24 months as the company diversifies its client base.
CounterHigh customer concentration is common in the oilfield services industry, and long-term drilling contracts with major operators provide revenue visibility that partly offsets the concentration risk.
Revenue has declined 13% year over year and business quality scores at 2.0/10, reflecting near-zero gross margins, negative net income, and a forward P/E of 108x that reflects minimal near-term earnings power.
→StableQuality breakdown
- Expectation
- Revenue decline rate improves to less than -5% year over year within 2 quarters as rig count stabilizes.
CounterThe PEG ratio is 0.81 on a longer-term earnings basis, suggesting that if the oil and gas drilling cycle recovers, the stock could see significant multiple expansion.
The stock shows an extreme gap down of -6.9% that the data characterizes as a potential reversal signal, trades above its 200-day moving average, and the RSI at 37 is in pullback territory within what may still be an uptrend.
→StableTechnical breakdown
- Expectation
- Price rises above $11.47 resistance within 6 months following the gap recovery.
CounterVolume distribution shows falling OBV, which contradicts the gap reversal signal and suggests institutional sellers are still active on any price bounce.
Per-dimension breakdown
Quality
2.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 0.8 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 6.5 |
| Moat | 3.2 |
| Piotroski F | 5.6 |
- ▸No competitive moat
- ▸Quality concerns
Growth
5.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 10.0 |
- ▸Declining revenue: -13%
Momentum
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 8.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Oversold in uptrend (RSI 22)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 9.1 |
| erm sentiment | 5.5 |
- ▸Analyst upside: 38%
Insider
3.4/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Notable insider selling — $11,922,302 (0.330% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.7 |
| quality rank | 2.8 |
| growth rank | 1.1 |
Technical
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.1 |
| support resistance | 9.0 |
| 52w position | 4.8 |
| gap | 6.0 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.8 |
| days to cover | 7.2 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 2.5 |
| beta | 9.4 |
| debt equity | 8.4 |
- ▸High IV: 65%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.2 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 421.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- ASYMMETRY:1.7>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:27d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:2.7<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
1.67
Upside
+19.9%
Downside
11.9%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeCATALYST — Earnings in 27d with 3/4 beat streak
SuitabilityAGGRESSIVE — MCap $3.6B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Sentiment at 7.4 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:2.7<4.5.
The strongest dimensions are Sentiment at 7.4, Technical at 7.2, and Value at 7.1; the weakest are Quality at 2.0, Momentum at 2.7, and Insider at 3.4. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.67 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Ten customers represent 57% of total revenue, creating significant revenue concentration risk where the loss of even one or two major clients could materially reduce earnings in any given quarter.
Trip ifRevenue from the top 10 customers exceeds 65% in any future annual disclosure.
- P2Revenue has declined 13% year over year and business quality scores at 2.0/10, reflecting near-zero gross margins, negative net income, and a forward P/E of 108x that reflects minimal near-term earnings power.
Trip ifRevenue declines by more than 20% year over year in any single quarter.
- P3The stock shows an extreme gap down of -6.9% that the data characterizes as a potential reversal signal, trades above its 200-day moving average, and the RSI at 37 is in pullback territory within what may still be an uptrend.
Trip ifPrice falls below the 200-day moving average and OBV drops below its 90-day average for more than 30 days.
- P4The dividend yield is flagged at 375% of earnings, signaling a dividend that is deeply uncovered by current net income, creating a high probability of a dividend cut that would disappoint income-oriented investors.
Trip ifDividend per share decreases by more than 25% in any single announcement.