Will Baker Hughes Beat 1Q Earnings? - Analyst Blog
18 Abril 2013 - 3:25PM
Zacks
Houston-based oilfield services
company, Baker Hughes Incorporated (BHI) is set to
report its first-quarter 2013 results on Apr 19, 2013. Let’s see
how things are shaping up prior to the announcement.
In the last quarter, the company’s earnings of 62 cents per share
decreased 48.3% from $1.20 per share earned in the year-ago
quarter. The results were adversely impacted by unfavorable pricing
conditions in the North American Pressure Pumping business.
However, the results managed to beat the Zacks Consensus Estimate
by a penny.
Growth Factors this Past Quarter
Baker Hughes’ fourth-quarter results were stable having surpassed
the Zacks Consensus Estimate for both revenues and earnings.
However unfavorable pricing conditions in the North American
Pressure Pumping business had resulted in year-over-year lower
numbers both at the top and the bottom line.
The improvement came from strong international performance, thanks
to Latin America and Europe/Africa/CIS. The company’s robust
seasonal year-end sales, which represented more than 50% of
international revenue growth, were also of help. Although Middle
East/Asia Pacific experienced some issues with Iraq start-up costs,
these are expected to subside in late 2013 and return to more
standardized margins.
Of late in Baker Hughes’ monthly rig count release, the average
U.S. rig count for Mar 2013 was 1,756, down 223 from 1,979 counted
a year earlier. The monthly average Canadian rig count was 464,
down 28 from 492 counted in Mar 2012. This shows that North
American doldrums will continue to affect oil service providers
going forward.
Management believes the Middle East/Asia Pacific, and
Europe/Africa/Russia/Caspian regions, in particular Iraq and Saudi
Arabia, are likely to be the primary growth drivers in the future.
In such a scenario, we believe oil field providers like
Schlumberger Ltd. (SLB) without an overt North
American exposure would fare well going forward.
Earnings Whispers?
Our proven model does not conclusively show that Baker Hughes’ is
likely to beat first quarter earnings. That is because a stock
needs to have both a positive Zacks Earnings ESP (Read: Zacks
Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for
this to happen. That is not the case here as you will see
below.
Zacks ESP: The Expected Surprise Prediction or ESP, which
represents the difference between the Most Accurate estimate and
the Zacks Consensus Estimate, is 0.00%. This is because both the
Most Accurate Estimate and Zacks Consensus Estimate currently
stands at 62 cents.
Zacks Rank #3 (Hold): Baker Hughes’ Zacks Rank #3 (Hold) lowers the
predictive power of ESP because the Zacks Rank #3 when combined
with an ESP of 0.00% indicates the possibility of in line results.
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Exterran Partners, L.P. (EXLP) has an earnings ESP
of +4.35% and a Zacks Rank #1 (Strong Buy).
Epl Oil & gas Inc. (EPL) has an earnings ESP
of +9.76% and a Zacks Rank #1 (Strong Buy).
BAKER-HUGHES (BHI): Free Stock Analysis Report
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
EXTERRAN PTNRS (EXLP): Free Stock Analysis Report
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
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