Value
7.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 9.8 |
| EV/EBITDA | 8.5 |
| Fwd P/E | 1.9 |
| PEG | 10.0 |
| Analyst target | 6.0 |
- ▸Forward P/E: 59.7x
- ▸PEG: 0.38
- ▸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 score5.3/10
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. | ↓Deteriorating |
| 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. | ↑Improving |
| 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. | ↓Deteriorating |
| 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.
↓DeterioratingCatalyst 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.
↑ImprovingBear 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.
↓DeterioratingTechnical 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
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 9.3 |
| OBV | 10.0 |
| MA position | 7.0 |
| Volume | 2.3 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.5 |
| Analyst rating | 7.2 |
| Price target | 8.5 |
- ▸LLM news sentiment: +0.70 (n=1)
- ▸Analyst upside: 29%
Insider
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Notable insider selling — $11,922,302 (0.313% of mkt cap)
- ▸Institutions accumulating
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.7 |
| quality rank | 2.8 |
| growth rank | 1.1 |
Technical
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.0 |
| support resistance | 1.1 |
| 52w position | 5.6 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.2 |
| days to cover | 7.7 |
| volatility | 0.9 |
| beta | 9.2 |
| debt equity | 8.4 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| dividend safety | 5.8 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Earnings in 9 days
- ▸Dividend: 4.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (4)
- MOMENTUM:6.8>=5.5
- NEWS_BOOST:ANALYST:0.70
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.8<1.5@spot
Warning (3)
- INSIDER:0.31%=MODERATE
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:9d<=14d (soft)
Reward-to-Risk
0.80
Upside
+12.0%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 9d with 3/4 beat streak
SuitabilityAggressive — MCap $3.8B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's 0.8<1.5@spot outcome against Sentiment at 8.0 and asymmetric R:R of 0.80.
The strongest dimensions are Sentiment at 8.0, Value at 7.2, and Momentum at 6.8; the weakest are Quality at 2.0, Technical at 2.9, and Peer rank at 4.4. The V9 engine flagged 1 failed gate with 3 warnings, producing an asymmetric reward-to-risk of 0.80 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Customer Concentration Fragility
Trip ifRevenue from the top 10 customers exceeds 65% in any future annual disclosure.
- P2Revenue Decline Quality Deficit
Trip ifRevenue declines by more than 20% year over year in any single quarter.
- P3Technical Support Signals
Trip ifPrice falls below the 200-day moving average and OBV drops below its 90-day average for more than 30 days.
- P4Dividend Coverage Risk
Trip ifDividend per share decreases by more than 25% in any single announcement.