Next Generation Fleets Will Fuel Permian And Global Demand

Key Takeaways

• Accelerated shift to next-gen fleets and service automation positions ProPetro for significant margin gains and competitive advantage if Permian activity rebounds.
  
• Underrecognized growth potential from PROPWR and multi-industry expansion could drive outsized long-term earnings and enhanced market resilience.
  
• Heavy concentration in the Permian and sector-wide overcapacity, combined with tech trends and ESG pressures, pose significant risks to growth, profitability, and long-term sustainability.

Catalysts

Operates as an integrated oilfield services company.

• Analyst consensus expects stable high utilization and earnings consistency from next-generation fleets and long-term contracts, but this may be understated: 75% of ProPetro's fleet is already next-gen, and management is actively accelerating diesel-to-electric conversions ahead of competitors, uniquely positioning the company for an outsized share of any Permian recovery, which could drive a step-change in both revenue and margin profile.
  
• Analysts broadly agree that PROPWR will contribute steady, contracted revenues; however, management is signaling an intent to multiply the size of the business "as quickly as possible," with contracts outside completions already materializing and a visible pipeline of multi-industry opportunities, suggesting consensus is not fully capturing the exponential growth potential and EBITDA contribution from this segment.
  
• ProPetro's high-quality Permian Basin customer base and leading market share are likely to benefit disproportionately as U.S. oil and gas demand remains structurally robust for decades, enabling superior asset utilization, pricing power, and revenue stability during industry upcycles and downturns.
  
• As U.S. and global adoption of renewables remains slower than forecast-especially in industrial, production, and heavy transport-energy customers' intensifying focus on cost efficiency and emissions reduction will drive premium pricing for low-emission dual-fuel and electric fleets, enhancing ProPetro's route-to-market advantage and supporting long-term margin expansion.
  
• The company's investments in automation, digitalization, and service integration will further distinguish ProPetro as capital and labor efficiency become critical differentiators, enabling structural reductions in operating costs and improved asset turns, directly enhancing return on invested capital, cash flow, and sustainable earnings growth.

ProPetro Holding Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on ProPetro Holding compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming ProPetro Holding's revenue will grow by 6.2% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -11.1% today to 0.9% in 3 years time.
• The bullish analysts expect earnings to reach $15.3 million (and earnings per share of $0.69) by about August 2028, up from $-151.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 82.0x on those 2028 earnings, up from -3.3x today. This future PE is greater than the current PE for the US Energy Services industry at 13.2x.
• Analysts expect the number of shares outstanding to decline by 0.19% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.05%, as per the Simply Wall St company report.

ProPetro Holding Future Earnings Per Share Growth

Risks

• ProPetro's heavy reliance on shale production in the Permian Basin exposes the company to significant region-specific risks and limits diversification, leaving revenues and earnings vulnerable to local downturns or production declines.
  
• Persistent oversupply of hydraulic fracturing capacity, as highlighted by falling fracturing fleet counts and market "looseness," is resulting in increased competition and weakened pricing discipline, which is likely to erode ProPetro's net margins and pressure profitability.
  
• Efficiency gains in drilling and completion technology-such as simul-frac and longer lateral wells-are reducing the number of fleets required and lowering service intensity, which may dampen long-term demand for ProPetro's pressure pumping services and negatively impact fleet utilization and revenue.
  
• The company's sustained capital expenditure requirements for both maintenance of existing fleet and growth of new businesses like PROPWR may not generate sufficient returns if pricing power remains weak, risking ongoing compression of free cash flow and returns on investment.
  
• Structural headwinds from the global shift toward renewables and accelerating ESG mandates could result in shrinking demand for fossil fuel services, increasing environmental compliance costs, and constrained capital access, all of which threaten ProPetro's long-term revenue growth and earnings potential.

Valuation

• The assumed bullish price target for ProPetro Holding is $9.67, which represents two standard deviations above the consensus price target of $7.55. This valuation is based on what can be assumed as the expectations of ProPetro Holding's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $6.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $1.6 billion, earnings will come to $15.3 million, and it would be trading on a PE ratio of 82.0x, assuming you use a discount rate of 8.1%.
• Given the current share price of $4.82, the bullish analyst price target of $9.67 is 50.1% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.