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What's in the Cards for Ensco (ESV) This Earnings Season?

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Ensco plc , a leading supplier of offshore contract drilling services, is expected to report second-quarter 2017 results on Jul 27, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 66.67%. Ensco surpassed the Zacks Consensus Estimate in each of the preceding four quarters with an average positive surprise of 60.25%.    
 

ENSCO PLC Price and EPS Surprise

 

ENSCO PLC Price and EPS Surprise | ENSCO PLC Quote

What is Driving Better-Than-Expected Earnings?

Although crude ended the second quarter of this year 4.7% lower, the pricing environment of commodities was healthier than the year-ago quarter, mainly due to the historical OPEC agreement.

The April–June quarter this year was favorable for oil exploration and production (E&P) companies. The improved rig count data issued by Baker Hughes Inc. clearly indicates that more of these firms have been gathering for operations on the U.S. oil patches.

Ensco provides offshore drilling services to the energy industry, globally. The company expects to win more contracts from upstream energy players for drilling oil wells.

Also, shares of Ensco have underperformed the industry during the first quarter. During this period, shares of the company have lost 42.4% compared with 28.7% decrease for the broader industry.

Let’s see how things are shaping up for this announcement.     

Earnings Whispers

Our proven model does not conclusively show that Ensco is likely to beat earnings 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) for this to happen. 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 -41.67%. This is because the Most Accurate estimate is pegged at a loss of 17 cents and the Zacks Consensus Estimate stands at a loss of 12 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ensco carries a Zacks Rank #3 which increases the predictive power of ESP. However, the company’s -41.67% ESP makes surprise prediction difficult.

Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter.

TransCanada Corporation (TRP - Free Report) has an Earnings ESP of + 7.84% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

Boardwalk Pipeline Partners LP has an Earnings ESP of +6.90% and a Zacks Rank #2.

The Williams Companies Inc (WMB - Free Report) has an Earnings ESP of + 15.79% and a Zacks Rank #2.

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