Back to top

Bear of the Day

A few years ago it was the best of times for ceramic proppant producer CARBO Ceramics Inc. (CRR - Snapshot Report) as strong demand and tight supply pushed earnings to record highs. But international imports are hurting pricing power and 2013 estimates are being slashed.

CARBO Ceramics is the world's largest maker of ceramic proppant which is used during the hydraulic fracturing process. In the last couple of years, its product was one of the hottest in the energy industry. But then dry gas prices came down and international competitors increased production of proppant.

In 2011, earnings soared to a record of $5.61 per share but it's been downhill since then. In 2012 earnings fell 17.6% to $4.62. They're expected to fall another 25% to $3.45 in 2013.

As cheaper exports came onto the market, CARBO has cut ceramic proppant pricing by 14% in the last year in order to maintain its volume. It is also pushing back the opening of further capacity until 2014.

After it missed the first quarter Zacks Consensus Estimate by 14%, analysts cut full year guidance. 8 estimates have been cut for 2013 in the last 30 days. That has pushed the Zacks Consensus down to $3.45 from $4.27.

No Rally in the Shares

While the rest of the stock market hits new highs, CARBO's shares have been mired in a 2-year slump.

Some may think this is buying opportunity. But shares are trading with a forward P/E of 20. That's not exactly cheap when you compare it to bigger, and more diversified, oil service companies like Halliburton (HAL - Analyst Report) which is a Zacks Rank #2 (Buy) trading at 13.5x.

CARBO Ceramics is a Zacks Rank #5 (Strong Sell). In the near term, CARBO will probably continue to struggle. The Zacks Rank, however, is a short term recommendation.

Over the longer term, analysts aren't as bearish. 2014 can't come soon enough.

Want More of Our Best Recommendations?

Zacks' Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Then each week he hand-selects the most compelling trades and serves them up to you in a new program called Zacks Confidential.

Learn More>>

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.00 +3.09%
SANCHEZ ENE… SN 34.18 +2.67%
PANTRY INC PTRY 21.02 +2.09%
INTEL CORP INTC 35.15 +1.88%
PIPER JAFFR… PJC 54.54 +1.70%