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Bull Of The Day Hi-Crush Partners (HCLP)

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Hi-Crush Partners (HCLP - Free Report) is a Zacks Rank #1 (Strong Buy) and sports straight A's on its report card.  Well not really a report card, but the Zacks Style Scores for Value, Growth and Momentum are all A's. Investors love to see that from a stock and so do I and that is why I made HCLP the Bull of the Day.

Description

Hi-Crush Partners provides proppant and logistics solutions to the energy industry in North America. The company produces monocrystalline sand, a specialized mineral used as a proppant during the well completion process to facilitate the recovery of hydrocarbons from oil and natural gas wells. It owns, operates, and develops sand reserves, and excavation and processing facilities throughout Wisconsin. The company offers raw frac sand used in hydraulic fracturing process for oil and natural gas wells. Hi-Crush Partners LP was founded in 2012 and is based in Houston, Texas.

Recent Earnings

On May 1, the company posted earnings of $0.59 and that was $0.04 better than the consensus estimate at the time.  Revenues came in at $218M for a year over year increase of 161% and also ahead of the $212M estimate.

Guidance wasn't specific in terms of actual revenue numbers, but the company did say they expected sales volumes to increase to a range of 2.9 to 3.1 million tons.

Earnings Estimates

Following the report, estimates moved up, but they were already inching higher before the print. 90 days ago the Zacks Consensus Estimate for 2018 was at $2.26, but that bumped up to $2.46 as of 30 days ago and is now at $2.84.  That is just what investors love to see.

The 2019 Zacks Consensus Estimate moved from $1.91 to $2.20 over that same 90 day period.  This poses a small dilemma for shareholders, as there is expected earnings contraction to take place next year.  With 2018 almost halfway over, investors will soon focus on 2019, so hopefully, some more visibility will come with the next earnings report.

Valuation

I see a wonderful valuation for HCLP, with a forward multiple of 4.7x and a trailing earnings multiple of 8x.  Either way you look at it, that is pretty low.  Price to book is a more conservative measure and at 1.45x multiple is another reason the stock has a value style score of A.

What really impresses me in the increase in net margin over the last three quarters.  That measure has moved from 7% to 13% to 19% and it looks to be headed higher in future quarters.

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