Why Kailix’s new position is drawing attention to Select Water Solutions

Kailix Advisors LLC’s newly disclosed stake in Select Water Solutions (WTTR), together with the company’s focus on water infrastructure and recycling and the approaching Q1 2026 earnings release, has pushed the stock onto more investors’ watchlists.

At a share price of $16.61, Select Water Solutions has seen strong momentum, with a 30 day share price return of 9.42%, a 90 day share price return of 35.92%, and a 1 year total shareholder return of 105.46%. This has pushed it firmly onto investors’ radar as Kailix’s new stake and the upcoming Q1 2026 results concentrate attention on how its water infrastructure shift is being reflected in market expectations.

If this kind of move has you thinking about what else is gathering momentum in the market, it could be a good time to broaden your search and check out 17 top founder-led companies

With the stock up sharply over the past year and trading only slightly below the average analyst price target, the key question now is whether Select Water Solutions is still undervalued or if the market is already pricing in future growth.

Most Popular Narrative: 4% Undervalued

With Select Water Solutions last closing at $16.61 against a narrative fair value of $17.30, the widely followed view sees modest upside grounded in detailed cash flow work using a 7.4% discount rate.

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.

Want to see what turns that contract backlog and recycling push into a higher fair value? The narrative leans on earnings growth, margin expansion and a richer future multiple.

Result: Fair Value of $17.30 (UNDERVALUED)

However, this hinges on continued execution, since heavy Water Infrastructure capex and revenue concentration in a few large oil and gas customers could quickly test that narrative.

Another Angle On Valuation

The narrative fair value points to modest upside, but the P/E ratio tells a different story. At 95.4x earnings versus a fair ratio of 25.2x, and compared with 26.9x for the US Energy Services industry and 61.8x for peers, the stock screens as expensive. Is this a quality premium or valuation risk building up?

To see how that high earnings multiple compares with the underlying numbers, it is worth checking the detailed valuation breakdown. The fair ratio sits alongside sector and peer comparisons in See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment clearly mixed, now is the moment to look through the figures yourself and decide how the balance of risks and rewards stacks up, starting with 2 key rewards and 3 important warning signs.

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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.