Forum Energy Technologies, Inc. (FET): A Bull Case Theory

We came across a bullish thesis on Forum Energy Technologies, Inc. (FET) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on FET. Forum Energy Technologies, Inc. (FET)'s share was trading at $16.31 as of May 14^th. FET’s forward P/E was 8.67 according to Yahoo Finance.

Forum Energy Technologies (FET) is navigating a difficult macro environment, with oil prices nearing four-year lows and rig counts expected to decline, which could impact revenue with a six- to nine-month lag. While consumables are more resilient than frac fleets, FET's top line remains closely tied to rig activity. Management expects strength in Q2 2025 but flags a weaker Q3, prompting proactive cost cuts, including $10 million in SG&A savings. The company maintains its 2025 free cash flow guidance of $40–$60 million, equating to a compelling 22–33% yield on its $181 million market cap. However, this cash flow is largely inventory-driven, and operational margins are thin, with breakeven profitability leaving little cushion for shocks that could result in quarterly losses and share price pressure.

Tariff-related supply chain inflation, including a 30% spike in domestic steel prices, is squeezing margins further—particularly in valves, where China-related headwinds have triggered a buyer’s strike. Yet the subsea segment offers optimism, with strong growth in consumables and a front-loaded order book—75% of which is expected to be delivered within 12 months—though it’s unclear if this stems from market share gains or broader offshore recovery. To address leverage above target, FET launched a modest buyback, repurchasing 1% of its float, and plans to use half of future free cash flow for debt reduction and the remainder for repurchases or M&A.

Management views shares as undervalued and aims to reduce the float significantly. Additionally, as shale fields mature and become gassier, consumables demand may rise, extending FET’s long-term growth trajectory despite current headwinds.

Forum Energy Technologies, Inc. (FET) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held FET at the end of the fourth quarter which was 5 in the previous quarter. While we acknowledge the risk and potential of FET as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FET but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.