Oilfield services: the 3 top rated stocks

2026-07-03 · By Lubin Danilo, founder of Lubin Investment

In the oil and gas sector, only three companies, SLB, TechnipFMC and Cactus, pass my ten quality checks. None of them extracts oil: all three sell technology and services to producers, billed largely independently of the oil price. That difference in business model explains their financial strength.

What to remember

• SLB, TechnipFMC (FTI) and Cactus (WHD) are the only 3 companies in the Oil & Gas Equipment & Services sector to pass all 10 of my quality checks, out of every oil and gas company my tool has screened.
• None of the three produces a single barrel of oil or gas: they sell technology, equipment and services to the producers, which completely changes their relationship to the oil price.
• SLB is the generalist giant, about 82 billion dollars in market value, TechnipFMC specializes in subsea equipment, Cactus is a smaller pure play (a company focused on a single business line, with no other diversification) on wellheads, about 4.7 billion.
• Cactus has the highest cash margin of the three, 26.9%, and the fastest growth, roughly 30.6% a year over five years, but also the lowest net margin and the longest customer payment delay.
• At today's price, SLB is not in my buy zone: my reasonable buy price sits around 37.15 dollars, against a current price of 54.89 dollars.

Why compare these three companies together

I have already published a full writeup on SLB, on TechnipFMC and on Cactus, each one on its own. What was missing was the big picture: why these three specifically, and not the dozens of other oil and gas companies my tool has screened? The answer fits in one sentence: they do not sell oil, they sell services and equipment to the people who extract it.

The trap of confusing a producer with a supplier

An oil company in the strict sense, ExxonMobil, Chevron or Occidental to name the best known ones, makes its revenue by selling a barrel of oil or a cubic meter of gas. It does not set that price: it depends on global supply, OPEC+ decisions, Chinese demand, a war in the Middle East. That kind of company is what is called a price taker: it takes the market price, it does not negotiate it.

SLB, TechnipFMC and Cactus do not sell a single barrel. They sell drilling equipment, wellhead systems, subsea hardware, seismic data, software, maintenance. Their customers are the producers themselves. A good share of their revenue comes from service contracts and equipment billed per unit or per job, largely independent of the day's oil price. That is not full immunity: if oil prices collapse for a sustained period, producers cut spending and orders slow down too. But the exposure is far more indirect.

Why no oil producer makes my quality ranking

I have already explained elsewhere on the site why oil and gas producers almost systematically fail my quality checks. Put simply: their revenue depends on a price they do not control, and a large share of their available cash, often 70 to 90%, goes straight into capex (money reinvested into drilling new wells) just to offset the natural decline of existing production. An oil well runs dry. Producers have to keep drilling new ones just to hold output steady, which leaves very little free cash flow at the end of the day, exactly the central metric in my method.

Equipment and service companies do not carry that structural decline problem: their real asset is their technology, their patents, their service network, not a reservoir that empties out. That is exactly what lets them generate more free cash flow and pass my checks where producers almost all fail.

The numbers side by side

Before going through each one, here is the numeric comparison of the three companies, as it comes out of my screening tool.

SLB, the giant that does it all

SLB, formerly known as Schlumberger before its 2022 rebrand, is by far the biggest of the three: about 82 billion dollars in market capitalization, well above TechnipFMC and Cactus combined. The company runs four main business lines: Digital and Integration (software, seismic, AI applied to exploration), Reservoir Performance (evaluating and stimulating a reservoir), Well Construction (drilling and drilling fluids), and finally Production Systems, covering both surface and subsea equipment.

With revenue that has grown roughly 13.3% a year on average over five years, a free cash flow margin of 12.1% (meaning that out of 100 dollars of sales, 12.10 dollars become cash actually available), and a Cash ROCE of 21.1% (the cash return the company generates on the capital it invested, measured in cash rather than accounting profit), SLB remains a solid machine. The point I keep an eye on: its net debt relative to free cash flow reaches 2.03, the highest of the three. That is not alarming on its own, but it is a figure worth watching if the cycle turns.

Another point worth noting: the average time SLB takes to collect payment from customers, 97 days, is the longest of the three. That means the company waits, on average, more than three months between delivering a service and actually getting paid, a sign of somewhat weaker negotiating leverage with its large oil company customers than TechnipFMC.

And on price? At 54.89 dollars, SLB trades at 18.92 times its free cash flow, the P/FCF (price to free cash flow), the share price divided by the cash the business actually generates each year. My method puts a reasonable buy price around 37.15 dollars for this company: so we are well above it, the stock is not in my buy zone by my criteria, even though its quality is not in question. You can find the full detail on the SLB analysis page.

TechnipFMC, the subsea specialist

TechnipFMC was formed in 2017 from the merger of France's Technip and America's FMC Technologies. The company has since narrowed its focus to a single, highly technical business: designing, building and installing subsea equipment (subsea meaning everything that sits on the seafloor to extract offshore oil or gas: subsea wellheads, manifolds, umbilicals). Its flagship concept is called iEPCI (integrated engineering, procurement, construction and installation): instead of selling equipment and letting someone else install it, TechnipFMC manages the entire subsea project from start to finish, which shortens timelines and boosts its margins.

Of the three companies in this comparison, TechnipFMC has the best Cash ROCE, 30.4%, and a net margin of 10.6%, the highest of the trio. Its net debt relative to free cash flow is negative, -0.33, meaning the company holds more cash than debt: it could pay off all its debt with cash on hand and still have some left. Its market capitalization, around 26.6 billion dollars, puts it clearly below SLB but well above Cactus.

What I like about TechnipFMC: its customer collection period is just 39 days, the shortest of the three. That reflects real negotiating power with its clients, the large oil companies that commission subsea projects worth several hundred million dollars. At 66.84 dollars, the stock trades at 19.82 times its free cash flow. The full detail is on the TechnipFMC analysis page.

Cactus, the pure play on wellheads

Cactus is by far the smallest of the three, with a market capitalization of about 4.7 billion dollars, nearly 20 times smaller than SLB. Founded in 2011 by the Bender family to serve the booming US shale oil and gas market, the company built itself around one precise craft: wellheads and surface pressure control equipment (a wellhead being the assembly of valves sitting on top of a well that regulates pressure and allows safe extraction). Since acquiring FlexSteel in 2023, Cactus has also diversified into spoolable pipe technology, a second line of business complementing its historical core.

The numbers tell a different story from SLB or TechnipFMC. Cactus's revenue growth has run at roughly 30.6% a year over five years, by far the strongest of the three, driven by acquisitions and by its deep footprint in US shale basins where equipment demand runs structurally strong. Its free cash flow margin, 26.9%, dwarfs both larger competitors: out of 100 dollars of sales, nearly 27 become available cash. Its net debt to FCF is negative, -0.86, a sign of a very solid balance sheet.

On the other hand, its net margin, 6.2%, is the lowest of the three: a different cost structure, a younger company, less volume to spread fixed costs over than a giant like SLB. And its customer collection period, 183 days, nearly six months, is by far the longest, a point worth watching, especially for a company this size, more exposed than SLB to a slow paying client. At 56.64 dollars, Cactus trades at 14.75 times its free cash flow, the lowest valuation of the three. The full detail is on the Cactus analysis page.

What this comparison means for you

These three companies share the same foundation, ten quality checks passed, but they do not look alike at all. SLB is size and diversification, with debt worth watching and a price that, as I write this, is not yet a bargain by my method. TechnipFMC is the highest return on capital and a very clean balance sheet, built on a more focused business, subsea. Cactus is the strongest growth and cash margin, in a smaller and therefore more volatile package, with an acknowledged weak spot in how long it takes to get paid.

None of the three is immune to a genuine downturn in the sector: if oil and gas producers cut spending hard for several years, orders for drilling, subsea equipment or wellheads slow down too, with a lag of a few quarters. The difference with a pure producer is that the shock arrives in a more indirect and slower way, and that these three companies would face any slowdown with balance sheets clearly stronger than the sector average.

How I built this ranking

I never judge a company's quality by gut feeling. I codified ten concrete financial checks (profitability, revenue and cash growth, debt management, return on invested capital, among others) and I apply them the same way to any stock, oil sector or not. Out of every oil and gas company my tool has screened, SLB, TechnipFMC and Cactus are, as of today, the only ones that check all ten boxes. That is exactly the kind of distinction I wanted to be able to make in a few seconds for any stock, so I built it into my analysis tool.

FAQ

Why doesn't a producing oil company, like ExxonMobil or Chevron, appear in this ranking?

Because their revenue depends directly on an oil price they do not control, and a large share of their cash, often 70 to 90%, goes into investment just to offset the natural decline of their wells. That leaves them very little free cash flow, which keeps them from passing my quality checks.

What is Cash ROCE and why do I look at it?

Cash ROCE measures the cash a company generates relative to the capital it invested to produce it (debt and equity). The higher it is, the more value the company creates with each dollar invested. TechnipFMC has the best of the three, 30.4%.

What is the real difference between SLB, TechnipFMC and Cactus?

SLB is a global generalist present across the whole chain (seismic, drilling, production). TechnipFMC specializes in subsea equipment and engineering. Cactus is a smaller, more focused pure play on wellheads and surface equipment, mostly in the United States.

Is SLB a good stock to buy today?

SLB is a high quality company by my ten checks, but my reasonable buy price sits around 37.15 dollars, against a current price of 54.89 dollars. So at this price it is not in my buy zone, even though its quality is not in question. This is not personalized investment advice.

Is the oilfield services sector risk free?

No. These companies remain indirectly tied to spending by oil and gas producers. If that spending drops for a sustained period, orders slow down too, with a lag of a few quarters. That said, they face this risk with balance sheets clearly stronger than the sector average.

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About the author

Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).