Flotek Industries, Inc. (NYSE:FTK)

CAPS Rating: 4 out of 5

The Company is a global supplier of drilling and production related products and services to the energy and mining industries.

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Member Avatar OklaBoston (68.01) Submitted: 12/17/2014 11:10:28 AM : Outperform Start Price: $17.46 FTK Score: +6.05

CEO open market buy this month eases worries about other things for me.

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Member Avatar TMFCavalier (63.31) Submitted: 11/12/2014 12:03:58 PM : Outperform Start Price: $20.15 FTK Score: -16.08

Business in One Sentence
Develops and supplies oilfield products, services, and equipment to the oil, gas, and mining industries; also develops and supplies high-value compounds to companies that make cleaning products, cosmetics, food and beverages, and other products.

Value Proposition
Provides more environmentally conscious chemistries to the oil and natural gas drilling industry that can displace environmental bad-actors (such as Xylene) used in the drilling, completion, and production of oil and natural gas wells. These chemistries have also shown an ability to improve the performance economics of unconventional wells.

Company Strategy and Advantage
Works in four segments:
- Energy Chemical Technologies (60% of gross profit) – develops, manufactures, and distributes a wide array of specialty chemicals used in both new and mature fields. The company’s unique and patented chemistries (Complex nano-Fluid, or CnF) are used in cementing, stimulation, acidizing, drilling, and production. CnF chemistries have been shown to meaningfully increase production and well integrity in unconventional gas and oil formations.
- CnF products are environmentally friendly and composed of renewable, plant derived, cleaning ingredients and oils that are certified as biodegradable.
- Approved for use in the North Sea, which has some of the most stringent oil field environmental standards in the world
- Flotek’s advanced reservoir modeling capabilities provide tailored chemistry solutions to address clients’ unique completion and production challenges
- Provides Logistics Technologies which manage automated material handling, loading facilities and blending capabilities for energy services companies and build bulk storage facilities
- Consumer and Industrial Chemical Technologies (7% of gross profit) – produces products from processed citrus oil, including high value compounds used as additives by companies in the flavors and fragrances markets, and environmentally friendly chemicals for use in the oil & gas industry and other industries
- Drilling Technologies (29% of gross profit) – provides downhole drilling tools for use in oilfield, mining, water-well, and industrial drilling activities. Also manufactures, sells, rents, and inspects specialized equipment used in drilling activities
- Artificial Lift Technologies (4% of gross profit) – provides pumping system components, electric submersible pumps, gas separators, production valves, and complementary services
- Company’s patented Petrovalve product line optimizes pumping efficiency in horizontal well completions as well as in heavy oil wells and wells with high liquid to gas ratios
- Flotek’s growth will hinge more on capturing market share away from competitors than on the growth of the industry

Other Business Details
- Acquired Florida Chemical Company in May 2013 – world’s largest processor of citrus oils
- Was key supplier of d-limonene, a key input to the company’s CnF chemistries
- Company’s top three customers collectively accounted for 30% of revenue in FY2013
- In November 2013, formed a JV with Tasneea Oil and Gas Technologies to create a chemistry research, manufacturing, and distribution facility in the Sultante of Oman – helps to expose Flotek to the most prolific hydrocarbon regions in the world, the Middle East and North Africa
- Revenue CAGR of 36% between 2010 and 2013
- EBITDA CAGR of 28% between 2010 and 2013

Risks
- Very competitive field with many larger, better capitalized firms
- Dependent on oil and natural gas drilling activity and industry spending
- Highly regulated industry and there could be changes in future policies, especially with regard to unconventional drilling
- Heavy customer concentration

Big Few
- Does the company plan on keeping the consumer business (Consumer and Industrial Chemical Technologies) gained from the Florida Chemical acquisition? Not totally aligned with other aspects of the business.
- How likely is it that its top customers could switch to another provider? Are they using multiple of Flotek’s services/products?
- Could an increase fracking regulation actually help Flotek since they seem to offer the more environmentally friendly alternative to chemicals currently used?

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Member Avatar uaau (30.67) Submitted: 10/31/2014 2:25:53 PM : Outperform Start Price: $21.85 FTK Score: -14.92

Prickle or don't, but eventually you've got to bite the zaleboat.

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Member Avatar dcrednek (80.30) Submitted: 10/24/2014 11:01:08 AM : Outperform Start Price: $23.28 FTK Score: -23.39

FTK manufactures chemicals used in oil and gas drilling. Their competitive advantage is that their products are not as harmful to the environment as competitors' products. As fracking expands in application (additional)environmental regulation will likely soon follow. FTK also produces other specialty chemicals so the company has to some degree diversified their customer base. Earnings growth exceeds the current P/E of the stock so there's some significant upside for the price despite the slowing expansion of drilling and discovery.

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Member Avatar simplemts (< 20) Submitted: 7/26/2014 7:43:18 PM : Underperform Start Price: $31.45 FTK Score: +43.51

Sell today, buy tomorrow.

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Member Avatar Ebarrerajr (< 20) Submitted: 5/19/2013 6:51:13 PM : Outperform Start Price: $17.34 FTK Score: -13.33

Growth

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Member Avatar dvdsl15 (80.71) Submitted: 5/3/2012 1:27:13 AM : Outperform Start Price: $14.13 FTK Score: -11.56

medium high volume

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Member Avatar OldVNWarrior (< 20) Submitted: 1/19/2012 12:02:00 AM : Outperform Start Price: $13.20 FTK Score: -12.23

FTK specializes in oil drilling "Mud". It is a niche stock directly related to oil exploration. in Q3 it crushed the street by almost 400%. Until Oil exploration slows, it has nowhere to go but up. It's up 34% in the last 22 days since being downgraded by TD Ameritrade's Research Team. A downgrade by them is the best Buy signal I ever see.

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Member Avatar allen17 (39.28) Submitted: 1/8/2012 6:48:36 PM : Outperform Start Price: $12.13 FTK Score: -3.39

It is in an industry that is currently very active in a region (US) who's goal is to be energy independent, with the right skills and equipment

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Member Avatar NoDoughBro (70.23) Submitted: 11/15/2011 1:17:13 AM : Outperform Start Price: $8.53 FTK Score: +59.63

183 All-Stars!

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Member Avatar ftklover (< 20) Submitted: 8/20/2011 4:54:39 PM : Outperform Start Price: $6.20 FTK Score: +129.71

In the end , I think any new fracking regulations would benefit FTK, because their products are environmentally friendly. With the small float and no dividends, FTK is a computer short sellers dream, since there is no uptick rule anymore. While us FTK shareholders are crying, there is comfort in knowing it can go up just as fast, with a little help from the overall market.

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Member Avatar kyfe8 (< 20) Submitted: 8/19/2011 11:37:11 PM : Outperform Start Price: $6.20 FTK Score: +129.71

Flotek Industries has solid Revenue and Cash Flow. The Cash Flow from the most recent financial report may seem inadequate as it was in the negative, but it was because a lot of debt was paid off over this period. Almost all of the Liability + Equity on the balance sheet is found in Equity. The recent drop in Stock Price is accredited to the sell-off that is affecting the entire Market. Buying this stock now is a no-brainer.

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Member Avatar 82882 (< 20) Submitted: 8/19/2011 7:43:53 PM : Outperform Start Price: $6.20 FTK Score: +129.71

The world needs energy.

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Member Avatar MOTV8 (< 20) Submitted: 4/15/2011 2:27:10 PM : Outperform Start Price: $8.91 FTK Score: +58.86

"Clean" fracking stuff....great growth.

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Member Avatar lloyd70mb (72.32) Submitted: 1/12/2011 6:04:00 PM : Outperform Start Price: $5.87 FTK Score: +165.59

Stock devastated by oil drop in price and lack of drillling in past two years that is making a big comeback.

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Member Avatar franktejon (< 20) Submitted: 7/8/2010 3:24:17 AM : Outperform Start Price: $1.20 FTK Score: +1,407.74

strong buy

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Member Avatar RobertJBanach (< 20) Submitted: 7/4/2010 4:09:31 PM : Outperform Start Price: $1.20 FTK Score: +1,407.74

Will head back towards $10 after GoM oil spill clean up and the ecomony upticks next year.

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Member Avatar stevejoneslcsw (54.02) Submitted: 6/30/2010 3:24:57 PM : Outperform Start Price: $1.22 FTK Score: +1,371.51

it's up and down...but up from here....

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Member Avatar colonnar (< 20) Submitted: 1/9/2009 3:16:01 PM : Outperform Start Price: $3.98 FTK Score: +246.93

It was overhyped and overpriced in early 08; it was shorted and oversold in late 08; and, it is now undervalued. Revenues will show a steady increase as its proprietary chemicals, equipment, and technologies gain market share - here and overseas.

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Member Avatar lizhersh (< 20) Submitted: 10/7/2008 8:09:41 AM : Underperform Start Price: $7.24 FTK Score: -66.27

Small, niche player in a market where size matters. Faced with aggressive, "we'll roll ove you" rivals. The company's R&D record is mediocre at best-- the main successes coming out of "green" technologies of uncertain environmental bona-fides.

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