Value
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 9.7 |
| EV/EBITDA | 6.7 |
| Fwd P/E | 4.4 |
| PEG | 4.8 |
| Analyst target | 7.5 |
- ▸Forward P/E: 27.8x
- ▸PEG: 1.74
LBRT · Why this verdict
Why Liberty Energy (LBRT) 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 score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Liberty Energy's equity carries a cyclical recovery paradox: three consecutive quarterly beats signal operational resilience, yet the forward multiple of approximately 77x versus the trailing 31x implies aggressive recovery expectations that collide with deeply negative free cash flow, significant margin compression of approximately 54%, and leverage of 3.2 times equity—making the current setup high-risk with an unfavorable reward-to-risk geometry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is deeply negative—generating cash outflows that substantially exceed reported net income—which means the business is consuming capital far beyond what its accounting earnings suggest and leaves virtually no margin of safety if the operating environment deteriorates. Quality breakdown | Free cash flow turns positive and sustains above zero for 2 consecutive reported quarters. | →Stable |
| CounterThe strong Piotroski F-Score of 7 out of 9 reflects balance-sheet health across most dimensions; the free-cash-flow shortfall may reflect a specific capital-deployment phase rather than structural cash destruction. | ||
The forward price-to-earnings ratio of approximately 77x is roughly 2.5 times the trailing multiple of approximately 31x, signaling that market expectations of near-term earnings recovery are extremely stretched—a pattern that often precedes earnings disappointments when the anticipated recovery fails to materialize as quickly as the multiple assumes. Warnings | The forward P/E compresses below 30x as realized earnings close the gap between forward estimates and trailing results over the next four quarters. | ↑Improving |
| CounterThe recent quarterly beat streak suggests the business is executing above depressed expectations; if activity levels improve, realized earnings could close the forward-versus-trailing gap faster than the current spread implies. | ||
The company has delivered positive earnings surprises in each of the three most recently reported quarters—including two consecutive periods where actual results beat consensus estimates that assumed losses by more than 100 percentage points—indicating the business is outperforming deeply depressed expectations. Earnings | The beat streak extends for at least one additional quarter, with the next reported EPS arriving above consensus. | →Stable |
| CounterTwo of the three beats were against consensus estimates that forecast losses, meaning the outperformance reflects a smaller-than-expected loss rather than genuine profitability; the most recent beat may reflect cost reduction rather than sustainable revenue strength. | ||
Operating margin has compressed by approximately 54% and debt-to-equity stands at 3.2—a combination that leaves limited financial flexibility if revenue softens, particularly given the already deeply negative free cash flow that constrains the ability to service and reduce debt organically. Warnings | Debt-to-equity falls below 2.0 as reported over 2 consecutive quarterly filings. | ↑Improving |
| CounterHigh leverage in an asset-intensive energy services business can be managed as long as cash generation stabilizes; if the earnings recovery continues, the debt burden becomes proportionally smaller and refinancing risk diminishes. | ||
Free cash flow is deeply negative—generating cash outflows that substantially exceed reported net income—which means the business is consuming capital far beyond what its accounting earnings suggest and leaves virtually no margin of safety if the operating environment deteriorates.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and sustains above zero for 2 consecutive reported quarters.
CounterThe strong Piotroski F-Score of 7 out of 9 reflects balance-sheet health across most dimensions; the free-cash-flow shortfall may reflect a specific capital-deployment phase rather than structural cash destruction.
The forward price-to-earnings ratio of approximately 77x is roughly 2.5 times the trailing multiple of approximately 31x, signaling that market expectations of near-term earnings recovery are extremely stretched—a pattern that often precedes earnings disappointments when the anticipated recovery fails to materialize as quickly as the multiple assumes.
↑ImprovingWarnings
- Expectation
- The forward P/E compresses below 30x as realized earnings close the gap between forward estimates and trailing results over the next four quarters.
CounterThe recent quarterly beat streak suggests the business is executing above depressed expectations; if activity levels improve, realized earnings could close the forward-versus-trailing gap faster than the current spread implies.
The company has delivered positive earnings surprises in each of the three most recently reported quarters—including two consecutive periods where actual results beat consensus estimates that assumed losses by more than 100 percentage points—indicating the business is outperforming deeply depressed expectations.
→StableEarnings
- Expectation
- The beat streak extends for at least one additional quarter, with the next reported EPS arriving above consensus.
CounterTwo of the three beats were against consensus estimates that forecast losses, meaning the outperformance reflects a smaller-than-expected loss rather than genuine profitability; the most recent beat may reflect cost reduction rather than sustainable revenue strength.
Operating margin has compressed by approximately 54% and debt-to-equity stands at 3.2—a combination that leaves limited financial flexibility if revenue softens, particularly given the already deeply negative free cash flow that constrains the ability to service and reduce debt organically.
↑ImprovingWarnings
- Expectation
- Debt-to-equity falls below 2.0 as reported over 2 consecutive quarterly filings.
CounterHigh leverage in an asset-intensive energy services business can be managed as long as cash generation stabilizes; if the earnings recovery continues, the debt burden becomes proportionally smaller and refinancing risk diminishes.
Per-dimension breakdown
Quality
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.6 |
| ROA | 0.9 |
| Gross margin | 0.0 |
| Op margin | 0.1 |
| Net margin | 1.9 |
| Current ratio | 7.6 |
| FCF quality | 0.0 |
| Moat | 3.8 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -127% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
- ▸Quality concerns
Growth
4.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 5.2 |
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.9 |
| MACD | 8.0 |
| OBV | 4.3 |
| MA position | 4.0 |
| Volume | 2.2 |
- ▸Uptrend pullback (RSI 36) - buy opportunity
- ▸Above 200-day MA
Sentiment
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 7.2 |
| Price target | 9.2 |
- ▸LLM news sentiment: +0.40 (n=2)
- ▸Analyst upside: 41%
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $1,673,803 (0.043% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.8 |
| quality rank | 4.1 |
| growth rank | 4.7 |
Technical
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.9 |
| support resistance | 7.8 |
| 52w position | 4.0 |
Risk (lower is worse)
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.6 |
| days to cover | 6.9 |
| volatility | 0.2 |
| beta | 9.7 |
| debt equity | 6.0 |
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.3 |
| news activity | 6.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 1 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:5.3>=4.5
- ASYMMETRY:2.3>=1.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- EARNINGS_PROXIMITY:1d<=7d
Warning (1)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
2.27
Upside
+22.3%
Downside
9.9%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $3.9B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the EARNINGS_PROXIMITY gate's 1d<=7d outcome against Sentiment at 7.7 and asymmetric R:R of 2.27.
The strongest dimensions are Sentiment at 7.7, Catalyst at 6.3, and Value at 6.2; the weakest are Quality at 2.7, Growth at 4.4, and Peer rank at 4.5. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 2.27 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cyclical Valuation Trap Forward Multiple
Trip ifForward P/E compresses below 30x for 2 consecutive quarters as realized earnings close the gap.
- P2Negative Free Cash Flow Earnings Quality
Trip ifFree cash flow rises above $0 for 2 consecutive reported quarters, indicating the business has closed the gap between reported earnings and cash generation.
- P3Earnings Beat Streak Operational Resilience
Trip ifEPS surprise falls below 0% (a miss) for 2 consecutive quarters.
- P4Elevated Leverage Margin Compression
Trip ifDebt-to-equity ratio falls below 2.0 as reported in 2 consecutive quarterly filings.