Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, oilfield service specialist Flotek Industries (NYSE: FTK ) has received a distressing two-star ranking.
With that in mind, let's take a closer look at Flotek's business and see what CAPS investors are saying about the stock right now.
|Market Cap||$208 million|
|Industry||Oil and gas equipment and services|
|Trailing-12-Month Revenue||$124.08 million|
CEO John Chisholm
CFO Jesse Neyman
|Return on Capital (Average Past 3 Years)||3.3%|
|Cash/Debt||$7.06 million / $133.07 million|
Baker Hughes (NYSE: BHI )
CARBO Ceramics (NYSE: CRR )
Schlumberger (NYSE: SLB )
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 5.5% of the 237 All-Star members who have rated Flotek believe the stock will underperform the S&P 500 going forward. These bears include jamespeer and TSIF, both of whom are ranked in the top 2% of our community.
Just last week, jamespeer touched on Flotek's seemingly unsustainable price run: "Q4 results have to be pretty amazing to justify this valuation."
Flotek has been a consistent five-star CAPS stock in recent years, but its monstrous 478% return over the past six months has many Fools quickly turning bearish. Currently, Flotek even trades at a rich price-to-cash flow multiple of 69.4, which is a big premium over rivals Baker Hughes (26.4), CARBO (30.1), and Schlumberger (21.1), as well as oilfield service giants Halliburton (NYSE: HAL ) (18.7) and Weatherford (NYSE: WFT ) (15.9).
CAPS All-Star TSIF elaborates on the bear case:
Part of the hype seems to be that three years ago they were creeping up on a $50 stock (when oil was creeping up to $140 a barrel and everyone was drilling in their backyards), and some speculators seem to feel that all company's should regain their former glory, regardless of their current standing post recession.
Land based drilling and well extension does seem to be picking up, especially after the disaster in the gulf, but not to the rate of giving Flotek a 20X book value. ... Oil prices, in my opinion will stagnate on a weakening dollar and a continued slow recovery. I do agree that slow growth is possible with Flotek, but volume is high, on a rapid rise, loyalty is weak, and a pullback is highly likely.
What do you think about Flotek, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!