Is Patterson-UTI Energy, Inc. overvalued or undervalued?

As of 23 October 2024, the valuation grade for Patterson-UTI Energy, Inc. has moved from expensive to risky, indicating a shift in perception regarding its financial health. The company appears to be overvalued, particularly given its negative P/E ratio and a Price to Book Value of 0.80, which suggests that the market is pricing the stock above its book value despite ongoing losses. Additionally, the EV to EBITDA ratio stands at 3.49, which is relatively low compared to peers, yet the negative ROCE of -1.25% and ROE of -3.41% raise concerns about its profitability.
In comparison to its peers, Noble Corp. Plc has a P/E of 12.39 and Valaris Ltd. has a P/E of 13.22, both indicating a more favorable valuation in the industry. Patterson-UTI's stock has underperformed significantly, with a year-to-date return of -33.05% compared to the S&P 500's 12.22%, and a three-year return of -60.44% against the S&P 500's 70.41%. This stark contrast reinforces the notion that Patterson-UTI is currently overvalued in the market.