ProPetro Holding Corp. (PUMP) stock intrinsic value fair value estimate & owner earnings analysis

ProPetro Holding Corp. (Midland, Texas) sells oilfield completion services, mainly to producers in the Permian Basin: hydraulic fracturing (73.2% of 2025 revenue), wireline (16.5%) and cementing (10.3%). In December 2024 it also launched PROPWR, which rents out mobile natural-gas power generation equipment; that business began earning revenue in the third quarter of 2025 and was 0% of 2025 revenue. Revenue was $1,269 million in 2025 versus $1,444 million in 2024. Net income was $0.8 million in 2025 after a $137.9 million loss in 2024 that included a $188.6 million write-down of older diesel-only frac equipment and a $23.6 million goodwill write-down in wireline. How we measure earnings. We start from cash generated by operations, remove swings in receivables, payables and similar working-capital items, subtract stock compensation as a real cost, and subtract the capital spending needed to keep the fleet running. Frac fleets wear out and must be continually rebuilt, so this business consumes a lot of capital. Depreciation and write-offs of retired equipment are large non-cash charges, and most of the cash they free up goes straight back into the fleet as capital spending. On this basis owner earnings per share were $2.60 in 2018, $0.31 in 2019, $0.15 in 2020, $0.03 in 2021, $0.48 in 2022, $0.58 in 2023, $1.12 in 2024 and about $(0.01) in 2025. The pattern shows how cyclical the business is. The level we use. We take the median of 2019 through 2024, which spans the 2020 collapse and the 2022-2023 recovery: roughly $0.40 per share, or about $42 million a year in total (median of $32 million, $15 million, $3 million, $52 million, $66 million and $118 million). 2018 is left out as a peak year during a rapid fleet expansion, when revenue rose about 74%. 2025 is left out because a large part of that year's spending went to power-generation equipment for the new PROPWR business (capital spending incurred was $281.2 million, of which $198.4 million was for power equipment), which the formula would otherwise treat as upkeep of the frac fleet. Owner earnings in the latest completed year were roughly break-even, and we assume zero growth in the base case, so no assumed rebound is being credited. Share count. The company sold 17.3 million new shares at $10.00 in January 2026, raising about $163.3 million after costs, and reported 122.8 million shares outstanding in its second-quarter 2026 results. All per-share values below use that larger share count. Base case ($5.26 per share). Earnings hold at about $42 million a year for 20 years and then stop. We give the business a long but finite life because it was formed in 2007 and came through the 2020 collapse, yet frac services are competitive, capital-hungry and tied to oil prices, so we do not assume it lasts forever. That is worth about $483 million, or $3.93 per share. We add the $163.3 million raised in January, $1.33 per share, valued at cost because it is being spent on power equipment whose returns we cannot yet document. No growth is credited: last year owner earnings fell from about $118 million to about break-even, so the base case starts at no growth, the frac fleet has no contracted growth, and the power business is too new to have a track record. Management has committed roughly 240 megawatts of power capacity as of February 2026 out of about 550 megawatts delivered or on order, and its second-quarter 2026 report says about 350 megawatts is now under contract. The company also reported issuing $690 million of zero-coupon convertible notes in May 2026. We assume that money is spent on equipment worth its cost, so it offsets the amount owed. The annual report does not give contract prices or returns, so we credit the equipment at its cost and nothing more. Bear case ($1.20 per share). Two named risks are already disclosed. First, the two-fleet agreement with XTO Energy, an ExxonMobil subsidiary, expires around late 2026 and the company says it does not expect it to be renewed. ExxonMobil was 24.9% of 2025 revenue, and the top five customers were 68.2%. Second, active frac fleets fell from 15 at the start of 2025 to 11 at year end because the company idled some rather than run them at uneconomic prices. In this case earnings stay at the 2020-2021 trough level, about $9 million a year, for 10 years and then end, worth about $0.53 per share. We give the power venture only half its cost back, $0.67 per share, because it has under a year of operating history. That half-recovery is a judgement, not a measured figure. Bull case ($7.52 per share). Earnings sit at the middle result of 2022 through 2024, about $66 million a year, and last 20 years. That level was actually achieved in the recent past, so it does not depend on a new product or a market forecast. That is worth about $760 million, or $6.19 per share, plus $1.33 per share for the January capital at cost. What could make this wrong. The power business could earn returns well above its cost, which we do not credit because the filings we used do not provide contract economics; if it did, all three cases would be too low. On the other side, the convertible notes and the large power equipment purchases add debt and execution risk, which we reflect only in the bear case. Frac pricing and oil prices are the largest swing factor, and we do not forecast them. Margin-of-safety price. The margin-of-safety price is about $2.90 per share, roughly 45% below the base case, because the business is highly cyclical, capital-intensive and concentrated in a few customers, and its new power line has little history.