WHD - Cactus Inc. Is Too Spiny
2024-07-02 10:08:16 ET
Summary
- Cactus, Inc. is a $3.4 billion market oilfield service company supplying wellhead equipment. Its dividend is small at 0.9%.
- Energy sector consolidation has reduced the demand for oilfield service companies like Cactus. For shale, this is somewhat offset by the need for constant drilling to replenish quick-decline reserves.
- 82% of Cactus’ equity is in publicly traded Class A shares; 18% is non-public Class B shares. The three top executives are family members, so related to one another.
cactuswhd.com
Cactus, Inc. ( WHD ) is a profitable oilfield services company that designs, manufactures, sells, and rents engineered wellheads, pressure control equipment, and spoolable pipe technologies. It divides its business into two parts: pressure control and spoolable technologies.
However, I recommend it as a hold (or not-buy) because it is near the top of its 52-week range, pays a minimal dividend, and the entire oilfield service sector has been and will be squeezed due to lower activity in the US, particularly as newly combined companies in the current mergers and acquisitions wave seek more efficiencies....
Cactus, Inc. Is Too Spiny