Select Water Solutions Inc.’s stocks have been trading down by -10.48% amid concerns over declining oil market demand.
Key Takeaways
- A significant public offering of around 13.7 million Class A shares priced at $12.75 each has been launched, prompting investor concerns and a subsequent stock price decline of more than 10%.
- The company announced the secondary equity offering scheduled in the $12.75-$13.25 price range, with reputable institutions such as JPMorgan and Bank of America leading the charge as joint bookrunners.
- Trading activity fell below the typical market metrics, further burdened by the underperformance of its fourth-quarter results, which showcased a breakeven EPS, missing an expected $0.03 per share.
- Insider trading activity emerged, including John Schmitz selling over $660,000 worth of shares, raising investor anxieties over potential dilution.
- Proceeds from these offerings are intended for broad corporate purposes, encompassing infrastructure and acquisitions, yet marketeseemed skeptical about immediate benefits.
Energy industry expert:
Analyst sentiment – negative
Market Position & Fundamentals: Select Water Solutions (WTTR) operates in a challenging market position, evidenced by an EBIT margin of 3.1% and a profit margin of 1.5%, which suggest thin profitability amid competitive pressures. The company boasts a revenue of $1.41 billion and a price-to-sales ratio of 1.22, but a high P/E ratio of 73.3 indicates potentially inflated market expectations. Their financial strength, however, is underscored by a total debt-to-equity ratio of 0.44 and a current ratio of 1.6, suggesting reasonable leverage and liquidity. A notable concern is the negative free cash flow of $6.05 million, impacting their investment capabilities. With a gross margin of 14.4%, the firm is tasked with controlling costs to bolster bottom-line performance.
Technical Analysis & Trading Strategy: The recent weekly price data reveals a downward trend for WTTR. Following an initial rise to a high of $15, prices have since contracted, closing at $12.73—a level that marks a potential support but also a breakdown from earlier highs. With weekly resistance at $14.41 and reoccurring lower highs and lows, the momentum points downward. Analyzing the 5-minute candlesticks, a persistent bearish pressure is evident. Trading volume remains sluggish, thereby reinforcing the bearish outlook. Traders should consider a short position on any rally attempt that fails at the $13.30-$13.90 resistance zone, whilst using a stop-loss slightly above the $14.41 level.
Catalysts & Outlook: Recent announcements of a $175 million secondary equity offering priced at $12.75 has significantly weighed on WTTR’s share price, causing over a 6% decline in pre-market activities. The dilution effect on current shareholders cannot be ignored, especially with the Q4 earnings breakeven failing to meet estimates, pinpointing profitability issues. The insider selling and increased share supply contribute to the negative sentiment surrounding this stock. Comparing WTTR’s performance to energy benchmarks, it is clear the firm is trailing behind the overall sector recovery. Tangible support is anticipated at $12.75, with a critical resistance threshold near $14. The dilution and market reaction suggest maintaining a cautious approach towards WTTR’s shares, as the outlook remains clouded by current market challenges.
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Weekly Update Feb 16 – Feb 20, 2026: On Saturday, February 21, 2026 Select Water Solutions Inc. stock [NYSE: WTTR] is trending down by -10.48%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.
Quick Financial Overview
The latest trading session has not been favorable for the company’s stock. As the underwritten public offering was priced at $12.75, the stock slid below this threshold, closing at $12.73 amid heightened selling pressure. Observably, this pricing strategy hints at lower-than-anticipated demand or confidence, which is often a red flag for investors causing the drop.
From a broader financial lens, trends show a constrained growth pattern, with key profitability metrics like EBIT margin and EBITA margin standing at 3.1% and 12.9%, respectively. The pre-tax profit margin lingers at a modest 1.6%. Anxieties over the company’s earnings momentum remain valid, considering a price-to-earnings ratio of over 73—a figure that suggests overvaluation compared to the sector peers.
Furthermore, the organization’s financial health, evidenced by a total debt to equity ratio of 0.44, indicates reasonable leverage but could be strained under the new issuance of stock. Current market sentiments seem to lack optimism despite the company’s strategic goals leveraging the newly raised capital.
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