Liberty Faces 40% Loss in a Year: Is it Time to Sell or Hold?

Liberty Energy Inc. LBRT, a Denver, CO-based oil and gas equipment and services provider, has significantly underperformed over the past year compared with its peers, sector and sub-industry benchmarks. Over a year, LBRT’s performance shows a dramatic decline of around 39.7%, which is one of the worst among all the companies listed. This is starkly contrasted by the performance of other companies like Ranger Energy Services RNGR, which was stable with no loss over the period.

In comparison, the broader Oil & Gas Field Services sub-industry (ZSI131M) experienced a 13.6% decline and the Oil & Energy sector (ZS12M) faced a 4.3% decrease. Similarly, ProPetro Holding PUMP and Oceaneering International OII declined around 37.2% and 12.2%, respectively. While the Oil & Energy sector struggled overall, Liberty Energy's performance stands out negatively, showing it as one of the worst performers in the group.

12-Month Performance Snapshot

Headwinds Impacting Performance

Concentration Risk in Cyclical Completions Services: LBRT remains highly concentrated in completions services, exposing it to the volatile boom-bust cycles of North America’s shale activity. Unlike Oceaneering International, which has a presence in robotics and deepwater engineering, or even Ranger Energy Services, which focuses on production and well servicing, LBRT lacks operational breadth. This limits its ability to cushion revenue shocks during downturns.

Anticipated Sequential Decline in Financial Performance: LBRT’s management has explicitly guided for a sequential softening in revenues and adjusted EBITDA for the third quarter of 2025. This is caused by a combination of reduced customer activity (mid-single-digit percentage decline in utilization) and pricing headwinds (low single-digit percentage decline). This forecast indicates near-term operational and financial pressure, breaking the positive momentum from the second quarter and signaling a more challenging market environment for the company in the immediate future.

In contrast, ProPetro Holding has communicated more stable utilization trends, reflecting potentially better fleet management or contract structures than LBRT.

Heightened Pricing Pressure in Completions Market: LBRT is battling significant pricing pressure across its diesel-powered fleet, with management noting “unconstructive” pricing behavior among peers. While Ranger Energy Services and ProPetro Holdingare also exposed to completions, LBRT appears to be more vulnerable due to a heavier reliance on legacy assets, while RNGR and PUMP may be benefiting from tighter cost controls or more efficient fleet deployment.

Exposure to Slowing North American Completions Activity: The company's core business is heavily tied to the health of North American oil and gas completions, which management anticipates will "gradually slow during the second half of the year." This industry-wide slowdown, caused by producer discipline, directly impacts the volume of work available to Liberty Energy, posing a fundamental headwind to its primary revenue stream.

Unproven and Long-Dated Nature of Power Business Initiatives: While the power business represents a growth avenue, its revenue contribution remains minimal in the near term. Major strategic alliances, such as the one with Oklo for nuclear power, are described as having revenue potential only by 2027 or the early 2030s. This creates a long and uncertain timeline before these ventures materially contribute to earnings, leaving the company reliant on the volatile completions business.

In contrast, Oceaneering International has existing, revenue-generating diversification channels, while Ranger Energy Services and ProPetro Holding maintain a sharper focus on their core strengths without overextending into speculative long-term ventures.

Competitive Threat From Industry Overcapacity: The company acknowledges that the current slowdown will accelerate equipment "cannibalization and attrition." However, the persistent overcapacity in the pressure pumping market, especially for older diesel fleets, continues to foster intense competition and pricing pressure, threatening Liberty Energy's profitability and market share for its non-differentiated assets.

Dependence on a Limited Number of Large Customers: LBRT's strategy involves deepening relationships with "long-term partners," which implies a growing reliance on a smaller number of large producers. While this can provide some stability, it also increases customer concentration risk. Any significant budget cut or strategic shift by one of these key customers could have a disproportionately large negative impact on the company's operations.

Analyst Sentiment Turns Bearish: Over the past 60 days, the Zacks Consensus Estimate for LBRT’s earnings per share has seen notable downward revisions for both the next fiscal year (F1) and the fiscal year after the next (F2) periods. F1 saw its estimate drop from 17 cents to 23 cents per share, indicating a 35.29% decline. Similarly, F2 experienced a significant decrease, with the estimate falling from 4 cents to 11 cents per share, marking a steep 175% decline.
 

These negative revisions indicate growing bearish sentiment among analysts regarding LBRT’s earnings outlook for both the current and upcoming fiscal years.

Final Thoughts for LBRT Stock

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This article originally published on Zacks Investment Research (zacks.com).

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