Value
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 1.9 |
| P/S | 9.9 |
| EV/EBITDA | 8.9 |
| Fwd P/E | 5.8 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 22.2x
- ▸PEG: 0.12
RES · Why this verdict
Why RPC (RES) 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 score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
RPC's quality score of 3.0 out of 10 — below the 4.0 minimum threshold — reflects near-zero ROE of 0.6%, near-zero gross margins, and no competitive moat, indicating the business does not generate sufficient returns on capital to meet the minimum quality bar despite growing revenue substantially in a favorable energy cycle. Quality breakdown | Quality score improves to above 4.0 within 12 months as revenue growth generates operating leverage and margins expand from the current near-zero level. | →Stable |
| CounterOil-field services margins are highly dependent on the energy industry pricing cycle, and if oilfield activity remains elevated, pricing power for completion services can improve rapidly — potentially lifting gross and operating margins faster than the current metrics suggest. | ||
Despite reporting net income, RPC generates free cash flow that is negative 71% relative to net income — meaning the business is actually consuming cash well above its reported earnings level — a red flag that indicates reported profitability does not translate into real cash available for shareholders or reinvestment. Quality breakdown | Free cash flow as a percentage of net income improves to above 0% within 12 months as capital expenditure intensity moderates with the current investment cycle. | →Stable |
| CounterOil-field services companies routinely experience capital-intensive periods when acquiring new pressure pumping or completion equipment to service growing customer demand, and negative free cash flow during expansion phases can precede significant positive cash generation once deployed equipment begins generating returns. | ||
A short interest of 27% of the float — among the highest in the dataset — combined with the stock already trading above analyst price targets (negative upside of 17.4%), indicates that a significant portion of the market believes the current price overvalues the business, and shorts are expressing this through active borrowing and selling of shares. Risk breakdown | Short interest falls below 18% within 12 months as either the bear thesis validates through price decline to analyst targets or positive fundamental news forces short covering. | →Stable |
| CounterHigh short interest in oil-field services names sometimes reflects energy sector cyclical hedges rather than company-specific conviction, and if the broader energy cycle extends, short covering in a name with 37% revenue growth could generate significant upside. | ||
With the current price of $6.89 above the analyst take-profit target of $7.26 but with an asymmetry ratio of negative 1.87 and a downside target of negative 17.4%, the risk-reward setup is clearly unfavorable — analysts believe the stock is overpriced and the downside risk is nearly twice the remaining upside. Targets | Analyst consensus price target rises above $7.50 within 12 months, restoring positive upside asymmetry and providing a new basis for considering a position. | →Stable |
| CounterRevenue growth of 37% year-over-year suggests analyst targets may simply be lagging the business's current momentum, and in a strong energy cycle, analyst upgrades and target increases have historically followed earnings beats by one to two quarters. | ||
RPC's quality score of 3.0 out of 10 — below the 4.0 minimum threshold — reflects near-zero ROE of 0.6%, near-zero gross margins, and no competitive moat, indicating the business does not generate sufficient returns on capital to meet the minimum quality bar despite growing revenue substantially in a favorable energy cycle.
→StableQuality breakdown
- Expectation
- Quality score improves to above 4.0 within 12 months as revenue growth generates operating leverage and margins expand from the current near-zero level.
CounterOil-field services margins are highly dependent on the energy industry pricing cycle, and if oilfield activity remains elevated, pricing power for completion services can improve rapidly — potentially lifting gross and operating margins faster than the current metrics suggest.
Despite reporting net income, RPC generates free cash flow that is negative 71% relative to net income — meaning the business is actually consuming cash well above its reported earnings level — a red flag that indicates reported profitability does not translate into real cash available for shareholders or reinvestment.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income improves to above 0% within 12 months as capital expenditure intensity moderates with the current investment cycle.
CounterOil-field services companies routinely experience capital-intensive periods when acquiring new pressure pumping or completion equipment to service growing customer demand, and negative free cash flow during expansion phases can precede significant positive cash generation once deployed equipment begins generating returns.
A short interest of 27% of the float — among the highest in the dataset — combined with the stock already trading above analyst price targets (negative upside of 17.4%), indicates that a significant portion of the market believes the current price overvalues the business, and shorts are expressing this through active borrowing and selling of shares.
→StableRisk breakdown
- Expectation
- Short interest falls below 18% within 12 months as either the bear thesis validates through price decline to analyst targets or positive fundamental news forces short covering.
CounterHigh short interest in oil-field services names sometimes reflects energy sector cyclical hedges rather than company-specific conviction, and if the broader energy cycle extends, short covering in a name with 37% revenue growth could generate significant upside.
With the current price of $6.89 above the analyst take-profit target of $7.26 but with an asymmetry ratio of negative 1.87 and a downside target of negative 17.4%, the risk-reward setup is clearly unfavorable — analysts believe the stock is overpriced and the downside risk is nearly twice the remaining upside.
→StableTargets
- Expectation
- Analyst consensus price target rises above $7.50 within 12 months, restoring positive upside asymmetry and providing a new basis for considering a position.
CounterRevenue growth of 37% year-over-year suggests analyst targets may simply be lagging the business's current momentum, and in a strong energy cycle, analyst upgrades and target increases have historically followed earnings beats by one to two quarters.
TrendMatrix Research · core thesis
Engine thesis — one sentence
RPC Inc. is an oil-field services company with 37% revenue growth and a high Piotroski F-Score of 7, but it has a quality score of 3.0 — below the minimum floor — carries a 27% short interest, generates sharply negative free cash flow of negative 71% relative to net income, and has already exceeded analyst price targets, leaving no constructive entry case.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.6 |
| ROA | 1.6 |
| Gross margin | 0.6 |
| Op margin | 0.7 |
| Net margin | 0.6 |
| Current ratio | 9.9 |
| FCF quality | 0.0 |
| Moat | 4.9 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -71% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
- ▸Quality concerns
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 37% YoY
Momentum
1.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 2.1 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.9 |
- ▸Capitulation risk (RSI 16, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+5.7%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.7 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 20%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.0 |
| quality rank | 2.4 |
| growth rank | 8.6 |
- ▸Industry growth leader
Technical
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.8 |
| support resistance | 9.8 |
| 52w position | 3.8 |
Risk (lower is worse)
2.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 4.1 |
| volatility | 0.0 |
| implied vol | 0.0 |
| beta | 9.2 |
| debt equity | 0.0 |
- ▸High short interest: 23%
- ▸High IV: 126%
Catalyst
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 4.0 |
| dividend safety | 5.2 |
- ▸Dividend: 286.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:19d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.8<4.5
- ASYMMETRY:0.5<1.5@spot
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.46
Upside
+4.7%
Downside
10.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $1.2B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 10.0 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:1.8<4.5.
The strongest dimensions are Growth at 10.0, Technical at 7.5, and Value at 6.9; the weakest are Momentum at 1.8, Risk (lower is worse) at 2.2, and Quality at 3.0. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 0.46 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Negative Free Cash Flow Red Flag
Trip ifFree cash flow as a percentage of net income falls below -100% in any single quarter, indicating capital expenditure demands are accelerating further and the gap between earnings and cash is widening.
- P2Extreme Short Interest Overvaluation
Trip ifShort interest rises above 30% of the float, indicating bearish conviction has further intensified beyond the already-extreme 27% level.
- P3Stock Above Analyst Targets
Trip ifStock price rises above $8.00 while analyst consensus price target remains below $7.50, widening the overvaluation gap to more than 7% above consensus.
- P4Quality Below Minimum Threshold
Trip ifGross margin remains below 5% for 3 or more consecutive quarters, confirming that revenue growth is not generating any meaningful contribution margin improvement.