Are Oils-Energy Stocks Lagging NCS Multistage (NCSM) This Year? An In-Depth
Analysis
The energy sector has always been a barometer for broader market sentiment,
and 2025 has presented a particularly interesting divergence. While many
traditional oils‑energy stocks have struggled to regain momentum after a
turbulent 2023‑2024 period, NCS Multistage (ticker NCSM) has posted relatively
strong performance, prompting investors to ask: Are oils‑energy stocks lagging
NCS Multistage this year? This article examines the underlying factors,
provides a side‑by‑side comparison, and offers practical insights for those
looking to navigate the current landscape.
Understanding NCS Multistage (NCSM)
NCS Multistage is a specialized provider of completion services and
technologies for unconventional oil and gas wells. The company focuses on
multistage fracturing solutions that help operators increase well productivity
while reducing environmental impact. Its business model blends equipment
sales, service contracts, and proprietary software that optimizes fracture
design.
In recent quarters, NCSM has benefited from several tailwinds. First, the
resurgence of activity in the Permian Basin and other shale plays has driven
demand for efficient completion services. Second, the company’s focus on
reducing water usage and improving proppant placement aligns with growing
operator pressure to meet stricter environmental regulations. Third, NCSM’s
balanced revenue mix—approximately 60 % from services and 40 % from product
sales—provides some insulation against pure commodity price swings.
Financially, NCSM has shown steady revenue growth, with year‑over‑year
increases averaging 8‑10 % over the last three fiscal years. Operating margins
have improved due to cost‑control initiatives and higher‑margin service
contracts. The stock has also attracted attention from growth‑oriented
investors who appreciate its niche positioning and recurring revenue streams.
Overview of Oils‑Energy Stocks Performance This Year
The broader oils‑energy universe, encompassing integrated majors, independent
explorers, and midstream firms, has displayed a mixed picture in 2025. Several
macro‑economic forces have weighed on the sector:
- Volatile crude oil prices, swinging between $70 and $90 per barrel, have created uncertainty for capital budgeting.
- Persistent inflation has lifted operating costs, particularly for labor and materials.
- Geopolitical tensions, including sanctions on certain oil‑producing nations, have disrupted supply chains.
- Increasing investor focus on environmental, social, and governance (ESG) criteria has led some funds to reduce exposure to traditional fossil‑fuel assets.
As a result, many oils‑energy stocks have underperformed relative to the
broader S&P; 500 index. The average total return for the sector year‑to‑date
sits around 4‑5 %, compared with roughly 12 % for the index. Notably,
large‑cap integrated majors have shown resilience thanks to diversified
downstream operations, while smaller pure‑play exploration and production
(E&P;) firms have faced steeper declines.
It is important to note that performance varies widely within the sector.
Companies with strong hedge books, low‑cost production, or exposure to natural
gas have fared better than those reliant on high‑cost oil projects.
Nonetheless, the aggregate trend suggests a lag compared with the
outperformance seen in NCSM.
Key Factors Behind the Potential Lag
Several interrelated dynamics help explain why many oils‑energy stocks may be
trailing NCS Multistage this year.
1. Commodity Price Volatility
Oils‑energy companies are directly exposed to the price of crude oil and
natural gas. When prices fluctuate sharply, earnings can swing dramatically,
leading to higher volatility in stock prices. NCSM, while still linked to
activity levels, derives a significant portion of its revenue from service
fees that are less sensitive to short‑term price moves. Its contracts often
include fixed‑fee components or escalators tied to activity rather than
commodity price, providing a steadier revenue stream.
2. Operational Efficiency and Technology Edge
NCSM’s proprietary multistage fracturing technologies enable operators to
achieve higher well outputs with fewer stages, reducing overall costs. This
technological edge translates into pricing power and the ability to win
contracts even when operators tighten budgets. Traditional oils‑energy
producers, especially those reliant on legacy drilling techniques, may not
enjoy the same cost advantages, making them more vulnerable during periods of
price pressure.
3. Regulatory and ESG Pressures
Governments worldwide are tightening regulations on methane emissions, water
usage, and surface disruption. NCSM’s emphasis on water‑less fracturing
solutions and low‑emission equipment positions it favorably in this evolving
landscape. Many oils‑energy firms face costly retrofits or potential
penalties, which can weigh on earnings forecasts and investor sentiment.
4. Valuation Multiples
Because of its niche service model, NCSM often trades at a higher
enterprise‑value‑to‑EBITDA multiple than the average oils‑energy producer.
Investors may be willing to pay a premium for its growth prospects and
recurring revenue. Conversely, many oils‑energy stocks trade at lower
multiples, reflecting market skepticism about long‑term demand for fossil
fuels. This valuation gap can contribute to perceived lag in price
appreciation.
5. Investor Sentiment and Capital Allocation
Recent fund flows indicate a shift toward energy transition themes, renewable
infrastructure, and companies with strong ESG scores. While NCSM is not a
pure‑play renewable firm, its efficiency‑focused services are sometimes viewed
as a bridge technology that supports responsible hydrocarbon development. This
perception can attract capital that might otherwise avoid traditional
oils‑energy names.
Comparative Metrics: NCSM vs Peer Oils‑Energy Stocks
To illustrate the divergence, consider a selection of key metrics as of the
latest quarter:
- Revenue Growth (YoY) : NCSM +9 %; Average oils‑energy peer +3 %
- Operating Margin : NCSM 14 %; Peer average 9 %
- Price‑to‑Earnings (P/E) : NCSM 22×; Peer average 15×
- Dividend Yield : NCSM 0.8 %; Peer average 3.2 %
- Beta (vs S &P; 500): NCSM 1.1; Peer average 1.4
The data shows that while NCSM commands a higher valuation multiple, it also
delivers stronger top‑line growth, better profitability, and lower market
sensitivity. The lower dividend yield reflects its reinvestment‑oriented
strategy, whereas many peers prioritize returning cash to shareholders.
What This Means for Investors
For those evaluating exposure to the energy complex, the current divergence
offers both opportunities and considerations.
Opportunity in Service‑Oriented Plays
Investors who believe that activity levels in unconventional basins will
remain robust may find value in companies like NCSM that provide essential
completion services. Their business models can benefit from increased drilling
without being as exposed to the downside of crude price drops.
Risk Management Through Diversification
Holding a blend of traditional oils‑energy stocks and service providers can
help smooth returns. When commodity prices fall, the service side may hold up
better; when prices rise, the upstream producers can capture upside.
ESG Integration
Given the rising importance of sustainability, investors might look at how
each company addresses environmental challenges. NCSM’s focus on water‑saving
technologies and lower emissions can be a positive ESG signal, while
traditional producers may need to demonstrate credible transition plans.
Valuation Awareness
The premium multiple on NCSM suggests that much of its expected growth is
already priced in. Investors should assess whether future contract wins and
margin expansion can justify the current level. For oils‑energy stocks, the
lower multiples may offer a margin of safety, but only if companies can
navigate cost pressures and regulatory headwinds.
Conclusion
In 2025, the question of whether oils‑energy stocks are lagging NCS Multistage
(NCSM) yields a nuanced answer. While many traditional oils‑energy names have
faced headwinds from commodity volatility, cost inflation, and shifting
investor preferences, NCSM has leveraged its service‑oriented,
technology‑driven model to achieve stronger revenue growth, improved margins,
and lower market correlation. This does not imply that all oils‑energy stocks
are doomed; rather, it highlights the importance of understanding the distinct
drivers within the sector. By weighing growth prospects, valuation, and ESG
considerations, investors can construct a balanced energy portfolio that
captures both the stability of service providers and the potential upside of
upstream producers when market conditions improve.
Frequently Asked Questions
Q1: Is NCS Multistage a good long‑term investment?
Answer: NCSM offers exposure to the essential completion‑services niche, which
tends to be less volatile than pure‑play exploration. Its focus on efficiency
and recurring revenue streams supports a solid long‑term outlook, provided
that activity in unconventional basins remains healthy. As with any stock,
investors should monitor valuation, competitive dynamics, and macro‑economic
trends.
Q2: How do oils‑energy stocks typically react to falling oil prices?
Answer: Most oils‑energy companies see earnings decline when oil prices fall,
because lower commodity prices reduce cash flow from production. Companies
with strong hedge books, low‑cost production, or diversified downstream
operations tend to be more resilient. Service‑oriented firms like NCSM may
experience a slower impact, as their revenue is linked more to activity levels
than to the price of the commodity itself.
Q3: What role does ESG play in the performance of energy stocks today?
Answer: ESG considerations have become a material factor in capital
allocation. Funds that prioritize sustainability may underweight traditional
fossil‑fuel producers, while favoring companies that demonstrate measurable
reductions in emissions, water use, or other environmental impacts. NCSM’s
technology‑focused approach to reducing frac‑stage intensity can be viewed
positively under ESG lenses, whereas upstream firms need credible transition
plans to maintain investor confidence.
Q4: Should I consider dividend‑yielding energy stocks for income?
Answer: Many integrated oils‑energy majors offer attractive dividend yields,
often exceeding 3 %–4 %. If income is a primary goal, these names can provide
steady cash flow, though investors should assess payout sustainability amid
fluctuating earnings. Companies like NCSM typically reinvest earnings into
growth, resulting in lower yields but potentially higher capital appreciation.
Q5: How can I diversify my energy exposure without overconcentrating in
one sub‑sector?
Answer: A balanced approach might allocate a portion to upstream producers
(for commodity upside), a portion to midstream companies (for stable fee‑based
income), and a portion to service providers like NCSM (for activity‑linked
growth). Additionally, incorporating renewable‑energy or energy‑transition
stocks can further diversify and align with evolving market themes.
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