Why the new iodine partnership matters for Select Water Solutions stock

Select Water Solutions (WTTR) has drawn fresh attention after agreeing with ISE Chemicals to develop commercial iodine extraction and refining facilities that use produced water from Select’s infrastructure across Texas, New Mexico and Oklahoma.

The collaboration introduces an additional revenue source tied to Select Water Solutions’ Water Infrastructure segment, with ISE Chemicals funding and operating the facilities while Select supplies produced water services and receives royalty payments.

Beyond the iodine agreement, Select Water Solutions has been in focus for its strong recent momentum, with a 90 day share price return of 29.17% and a 1 year total shareholder return of 129.60% highlighting how quickly sentiment has shifted in its favor.

If this kind of momentum catches your eye, it could be worth widening your search using our screener to see which other infrastructure linked plays are gaining attention through the 35 power grid technology and infrastructure stocks

With Select Water Solutions now trading at $19.66, sitting at an estimated 11% discount to one intrinsic value estimate and about 14% below an average analyst target, is there still a reasonable entry point here, or are markets already pricing in stronger future growth?

Most Popular Narrative: 10% Undervalued

Compared with the most widely followed narrative fair value of about $21.83, Select Water Solutions at $19.66 sits at a discount that this storyline works hard to justify.

The company has secured a substantial and growing backlog of long-term, acreage-dedicated water infrastructure contracts in the Northern Delaware Basin, providing high predictability on revenue and cash flows over multiple years, with further upside as undedicated and ROFR acreage is converted, positioning Select to achieve significant Water Infrastructure revenue growth above $400 million annual exit run rate in 2026. This is likely to support sustainable top-line growth and improved earnings visibility.

Curious how this contract backlog, margin uplift, and a richer future earnings multiple all connect into one fair value story, the narrative lays out a detailed blueprint that leans on steady revenue gains, rising profitability and a higher earnings base several years from now.

Result: Fair Value of $21.83 (UNDERVALUED)

However, Select Water Solutions still faces concentration in a small group of large oil and gas customers, as well as planned capital spending that could pressure returns if projects underperform.

Another View on Select Water Solutions valuation

The narrative fair value and analyst targets suggest Select Water Solutions may be undervalued, but the P/E picture sends a different signal. WTTR trades on a P/E of 113.2x versus 26.1x for the US Energy Services industry and 21.8x for peers, while its fair ratio is 27.6x, which implies a lot has to go right for today's pricing to hold.

For a closer look at what these P/E gaps might mean in practice for valuation risk, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mixed sentiment around Select Water Solutions has you thinking, now is a good time to review the data yourself and decide where you stand. Start with the 2 key rewards and 4 important warning signs.

Looking for more investment ideas beyond Select Water Solutions?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.