Liberty Energy Inc. (LBRT): what the price assumes

In the published model solve dated 2026-Q2, anchored at $17.02, Liberty Energy Inc. (LBRT) is priced for -1.3% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/LBRT

Headline

FieldValue
TickerLBRT
CompanyLiberty Energy Inc.
Current price$17.02/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)1.2%
Operating margin (mid-cycle)7.1%
Margin compression (value-band)-5.9pp
Trailing margin (depressed year)1.9%
Implied growth-1.3%
Multiple paid13x mid-cycle operating income

The operating-margin figure is value-band context at year 5: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.9pp.

How unusual the bet is: within-range

ReferenceValue
vs own history+0.51σ
cohort percentile (of 46 peers)44
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.91x5expensive
Earnings1.29x2expensive
Relative1.03x3expensive
Growth1.12x2expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.4%); the inversion above states its own rate.

Per-Model Detail (n=12)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$34.520.49xyesReference only (OCF-based, capex excluded): OCF $0.4B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$13.981.22xyesP/E 12.65x (blended: static sector reference 10x + trailing (TTM) 19x), scenarios: 9.5x / 12.7x / 15.2x (bear / base = reference held flat / bull), EV/EBITDA 6x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$9.771.74xyesBV/sh $11.72, ROE (TTM) 7.7%, ke 9.3%
Two-Stage Excess ReturnAsset$8.901.91xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$9.781.74xyesRev $4.0B, growth -3% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 6x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$19.840.86xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.32B × (1−21%) / WACC 6.4% → EPV (no growth)
Residual IncomeAsset$8.771.94xyesBV $11.72 + 5yr PV of (ROE (TTM) 7.7% − Kₑ 9.3%) × BV; BV grows 5.0%/yr
Graham NumberAsset$15.491.10xyes√(22.5 × EPS $0.91 × BVPS $11.72) — Graham's conservative floor
EV/EBITDA RelativeRelative$16.451.03xyesEBITDA $0.56B × sector EV/EBITDA 6.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$0.7622.40xyesEPS $0.91 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$1.2413.73xyesBV $11.72 × (ROIC 0.7% / WACC 6.4%)
P/Sales SectorRelative$29.230.58xyesRevenue $4.05B × sector P/S 1.2x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$9.841.73xyesEPS $0.91 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$865.2m
Net debt / NOPAT (after-tax)3.80x
Net debt / operating income (pre-tax)3.00x
Interest coverage7.5x
Share count CAGR (buyback)-2.5%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 7.1%); the trailing year was depressed.

Bullet Takeaways

Bull Case

One number frames the entire bull case: utilization. Liberty Energy runs a fleet of frac equipment, and the economics turn almost entirely on how much of that fleet is working and at what price. In the most recent quarter the company posted record pumping efficiencies and high fleet utilization even while absorbing the full weight of pricing headwinds and winter weather. That combination, keeping the fleet busy through a soft pricing patch, is the operational signal that matters most, because it means the equipment is preferred and the moment pricing recovers the operating leverage is immediate.

The business is built to be the premium operator, not the cheapest. Liberty describes itself as a "leader in completions design innovation and application" run by a team with "an average of over 20 years of energy services experience", and it backs that with proprietary technology, including its own logistics software offered as a service. The push into next-generation digiFleets, three to four more planned in 2026, is the company moving its mix toward equipment that commands better pricing and runs more efficiently, which is how a commodity-services firm earns a durable edge rather than competing purely on day-rate.

Management allocates capital like an owner. Liberty has been retiring its own stock, noting that "All Class A Common Stock shares repurchased to date have been retired upon repurchase", and the share count has fallen about 2.5% a year, while it raised the dividend alongside the most recent results. It also strengthened liquidity, completing roughly $1.3 billion of zero-coupon convertible notes that lifted cash to about $699 million and total liquidity near $1.2 billion. A premium operator buying back stock and arming itself with cash going into an expected activity recovery is positioning for the upcycle, not bracing for the down one.

Bear Case

The trouble with a frac company is that its best year and its worst year look like different businesses, and the price is paying as if the good times are the baseline. Liberty earns its money entirely from how much oil and gas operators choose to spend, and the company is explicit that completions activity is driven by "general domestic and international economic conditions, inflationary pressures, geopolitical developments, government regulations, and other factors" that move E&P capital budgets. None of that is in Liberty's control. When operators pull back, the fleet idles, pricing collapses, and a high-fixed-cost equipment business sees its margins evaporate fast. The current trailing operating margin near 2% is a glimpse of how thin it gets when pricing turns against the company.

That cyclicality is why the valuation is awkward. The price works out to roughly 19 times mid-cycle operating income and an assumption that operating profit grows about 19% a year for five years. The problem is that none of the valuation families reaches the current price: the asset, earnings-power, peer-multiple, and even the forward-growth methods all sit below it. When a cyclical is priced above every method including the growth read, the market is betting on a sustained upcycle, and oilfield services has a long record of upcycles that arrive late and leave early.

The balance sheet adds a second risk on top of the cyclical one. After the convertible issuance, net debt sits around three times operating income on a mid-cycle basis, with coverage adequate for now at roughly seven times. That is manageable in a good year, but a frac downturn hits revenue and margin together, and debt that looks light against peak cash flow looks heavier against trough cash flow. The bull is buying premium equipment and disciplined capital allocation; the bear is pointing out that the price already credits the recovery, the earnings are near a cyclical low, and the leverage cuts the wrong way if the recovery slips.

Valuation

Because Liberty's trailing profit sits near a cyclical low, the price has to be read against normalized, mid-cycle earnings rather than the depressed trailing figure. On that basis the market pays about 19 times mid-cycle operating income, which implies operating profit growing roughly 19% a year for five years. For a completions business whose demand the company ties directly to oil and gas activity and E&P spending, that is a demanding assumption: it requires not just a recovery but a sustained one.

The methods are unanimous in an unhelpful direction. No valuation family reaches the current price. The asset-value methods, anchored on book, sit at a fraction of the quote. The earnings-power methods land below it. Peer multiples against the oilfield-services cohort reach well under the price. Even the forward-growth methods, which credit the recovery, come up short. When every family including the growth read is below the price, the market is not paying for one method to be too conservative; it is paying for a cyclical upturn to run longer and stronger than the standard frames assume. The spread between the methods and the price is the size of that bet.

Solvency is the part to weigh carefully because it interacts with the cycle. The recent convertible issuance lifted cash to about $699 million and liquidity to roughly $1.2 billion, which buys flexibility, but it also put net debt near three times mid-cycle operating income. Interest coverage of about seven times is comfortable today; the question is what it looks like in a trough, when frac revenue and margin fall together. The share count is declining about 2.5% a year, real capital return that supports the equity. The honest read is that the downside here is governed less by the balance sheet than by where the company sits on the activity cycle, and the price assumes that position improves from here.

Catalysts

The first quarter of 2026 was a trough-and-turn print. Revenue came in at $1.02 billion, up 4% year over year, with net income of $22.6 million and adjusted EBITDA of $125.9 million, reflecting record pumping efficiency and high utilization while the company absorbed the full effect of pricing headwinds and winter weather. Management guided to sequential growth in revenue and improving profitability in the second quarter, tied to higher utilization and frac activity recovering from cyclical lows.

The capital structure changed materially in the quarter. Liberty completed two zero-coupon convertible senior note offerings totaling about $1.3 billion, raising cash to roughly $699 million and total liquidity to about $1.2 billion as of March 31, 2026. Alongside the results it raised the dividend, signaling confidence in cash generation through the cycle.

The operational catalysts to watch are the addition of three to four new digiFleets across 2026, which shifts the fleet toward higher-value completions, and the cadence of frac activity recovering off its lows. The single cleanest quarterly signal is pricing and utilization together: if both firm up as activity recovers, the thin trailing margin moves back toward the mid-cycle level the valuation is built on.

Peer Cohorts (Per Segment, With Filing Citations)

Hydraulic fracturing / completion services (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Liberty Energy Q1 2026 earnings release, April 2026 · Liberty Energy Q1 2026 earnings call, April 2026 · Liberty Energy 8-K, March 2026

View the full interactive LBRT report on boothcheck