3 Energy Stocks with Questionable Fundamentals Kayode Omotosho Mon, October 12, 2026 at 10:23 AM EDT 3 min read MUR +1.07% ^GSPC -0.03% CL=F +2.26% NESR -1.80% PTEN +0.66% Explore stocks on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Energy businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. But they are at the whim of volatile macroeconomic factors that influence capital spending (like interest rates and commodity prices), and the industry has underperformed the market over the past six months as its 1.7% return lagged the S&P 500 by 11.1 percentage points.
Investors should tread carefully as timing cyclical companies is a challenging task, and any misstep can have you catching a falling knife. Keeping that in mind, here are three energy stocks we're passing on.
Operating in waters over a mile deep in the Gulf of Mexico and extracting hydrocarbons from tight shale rock formations in Texas, Murphy Oil (NYSE:MUR) explores for and produces crude oil, natural gas, and natural gas liquids from fields in North America and Asia.
Costs have risen faster than its revenue over the last five years, causing its EBITDA margin to decline by 5.1 percentage points
At $38.44 per share, Murphy Oil trades at 11.9x forward P/E. Dive into our free research report to see why there are better opportunities than MUR.
Operating 135 Tier-1 super-spec rigs that can handle the industry's most demanding drilling projects, Patterson-UTI (NASDAQ:PTEN) provides contract drilling rigs, hydraulic fracturing, and drill bits to oil and gas operators.
Costly operations and weak unit economics result in an inferior gross margin of 29.9% that must be offset through higher production volumes
Static EBITDA margin over the last five years shows it couldn't become more efficient
Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of 5.8% for the last five years
Patterson-UTI is trading at $11.41 per share, or 66.3x forward P/E. Check out our free in-depth research report to learn more about why PTEN doesn't pass our bar.
Operating across 16 countries from Algeria to Indonesia, NESR (NASDAQ:NESR) provides oilfield services like hydraulic fracturing, cementing, and drilling to oil and gas companies.
Smaller revenue base of $1.62 billion means it hasn't achieved the economies of scale that some industry juggernauts enjoy
Gross margin of 12.8% is below its competitors, leaving less money to invest in exploration and production
Day-to-day expenses have swelled relative to revenue over the last five years as its EBITDA margin fell by 74.1 percentage points
NESR's stock price of $22.98 implies a valuation ratio of 11.1x forward P/E. To fully understand why you should be careful with NESR, check out our full research report (it's free).
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