The oil and gas sector has been a rollercoaster due to trade tensions and price swings. Most big-cap oil companies have managed to stay steady and delivered solid cash flows, but there have been some losers. Patterson-UTI Energy (NASDAQ:PTEN) is one. This oilfield services provider is trading at a bargain now, and its fundamentals scream opportunity for those willing to look beyond the market’s noise.

PTEN Stock Looks Oversold
This company is a quiet giant in the oilfield services and has operations spanning the United States and select international markets. This company does contract drilling and completion services like hydraulic fracturing. The past year has been brutal, but the pessimism now looks overdone to me.

Wall Street is mostly ignoring PTEN stock due to recent earnings misses and shifting sentiment regarding oil stocks. This company reported a net loss in the most recent quarters, and EPS fell short of earnings estimates. Revenue also missed forecasts, but a turnaround could be close as it has maintained solid cash flows, and the current administration’s pro-drilling narrative could lead to long-term gains.

PTEN currently yields 5.49%. It also has an above-average free cash flow yield and a commitment to returning at least 50% of adjusted free cash flow to shareholders through dividends and buybacks in 2025. Any rebound in oil prices or North American drilling activity would directly benefit PTEN’s core business lines, and there’s potential for more expansion into the Middle East

Should You Buy?
Analysts do see losses this year, but expect a return to profitability in 2026 and up to $1.1 in EPS in 2027. The baseline estimate is at $0.69 in EPS, which means you’re paying a bit over 8 times forward 2027 earnings.

Revenue growth is also expected to start recovering and accelerate in the coming years. The earnings here are mostly being altered by one-time impairments, and if you exclude them, earnings are much more positive. With that in mind, I believe PTEN is a long-term buy. You can sit on that juicy yield as the stock eventually turns around.

— Omor Ibne Ehsan

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Source: Money Morning