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What Awaits Emerge Energy (EMES) this Earnings Season?
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Fracking sand player Emerge Energy Services L.P. is set to release its second-quarter 2016 results before the opening bell on Monday, Aug 8.
In the preceding three-month period, the Southlake, TX-based partnership posted a negative earnings surprise of 142.37% amid negative margins and disappointing volumes sold.
As far as the earnings surprise history is concerned, Emerge Energy Services has a dismal record: its missed estimates in each of the last four quarters with an average miss of 109.21%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Emerge Energy Services’ successful initiatives in controlling costs (both fixed and variable) across all aspects of its business will improve its competitive positioning and augment its bottom line.
However, following the sale of its fuels unit – the partnership’s stable earnings segment – to Sunoco L.P. (SUN - Free Report) for $178.5 million, things look bleak for the to-be-reported quarter.
Moreover, the ongoing slump in crude prices will continue to take its toll on Emerge Energy Services’ second quarter results due to cutbacks in the production of the lucrative (and high margin) fracking sand that is used as a proppant by exploration and production companies. Pricing pressure will add to the woes.
Additionally, the partnership’s high leverage and miniscule cash in hand makes Emerge Energy Services vulnerable to even a small decline in revenue and earnings.
Earnings Whispers
Our proven model does not conclusively show that Emerge Energy Services will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -4.30%. This is because the Most Accurate estimate stands at a loss of 97 cents, while the Zacks Consensus Estimate is pegged narrower, at a loss of 93 cents.
Zacks Rank: Emerge Energy Services has a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for Emerge Energy Services, here are some firms from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:
Tesco Corp. has an Earnings ESP of +2.44% and a Zacks Rank #2. The company is expected to release earnings results on Aug 9.
Cheniere Energy Inc. (LNG - Free Report) has an Earnings ESP of +24.49% and a Zacks Rank #2. The company is anticipated to release earnings on Aug 9.
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What Awaits Emerge Energy (EMES) this Earnings Season?
Fracking sand player Emerge Energy Services L.P. is set to release its second-quarter 2016 results before the opening bell on Monday, Aug 8.
In the preceding three-month period, the Southlake, TX-based partnership posted a negative earnings surprise of 142.37% amid negative margins and disappointing volumes sold.
As far as the earnings surprise history is concerned, Emerge Energy Services has a dismal record: its missed estimates in each of the last four quarters with an average miss of 109.21%.
EMERGE ENRG SVC Price and EPS Surprise
EMERGE ENRG SVC Price and EPS Surprise | EMERGE ENRG SVC Quote
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Emerge Energy Services’ successful initiatives in controlling costs (both fixed and variable) across all aspects of its business will improve its competitive positioning and augment its bottom line.
However, following the sale of its fuels unit – the partnership’s stable earnings segment – to Sunoco L.P. (SUN - Free Report) for $178.5 million, things look bleak for the to-be-reported quarter.
Moreover, the ongoing slump in crude prices will continue to take its toll on Emerge Energy Services’ second quarter results due to cutbacks in the production of the lucrative (and high margin) fracking sand that is used as a proppant by exploration and production companies. Pricing pressure will add to the woes.
Additionally, the partnership’s high leverage and miniscule cash in hand makes Emerge Energy Services vulnerable to even a small decline in revenue and earnings.
Earnings Whispers
Our proven model does not conclusively show that Emerge Energy Services will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -4.30%. This is because the Most Accurate estimate stands at a loss of 97 cents, while the Zacks Consensus Estimate is pegged narrower, at a loss of 93 cents.
Zacks Rank: Emerge Energy Services has a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for Emerge Energy Services, here are some firms from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:
Tesco Corp. has an Earnings ESP of +2.44% and a Zacks Rank #2. The company is expected to release earnings results on Aug 9.
Cheniere Energy Inc. (LNG - Free Report) has an Earnings ESP of +24.49% and a Zacks Rank #2. The company is anticipated to release earnings on Aug 9.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>