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Bear Of The Day: Nine Energy (NINE)

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The Bear of the Day article is meant to be a post about how a stock became a Zacks Rank #5 (Strong Sell).  Most of the time, we see a falling stock price because investors that care about fundamentals see that earnings estimates are falling.  It is rare that we see a stock like Nine Energy (NINE - Free Report) rising even as estimates are falling.  

Description

Nine Energy Service, Inc. provides onshore completion and production services to unconventional oil and gas resource development. The Company's operating segment consists of Completion Solutions and Production Solutions. Completion Solutions segment provides services integral to the completion of unconventional wells. Production Solutions segment provides production enhancement and well work over services. It also offers auxiliary services including casing jacks with hydraulic power source and oil field equipment hauling. The company operates primarily in the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus, Utica and throughout Canada. Nine Energy Service, Inc. is headquartered in Houston, Texas.

Earnings History

The first thing I do when I look at a new stock is check the recent earnings history.  For NINE I see only three reports and what looks like a good track record.  Earnings history is a smaller part of what drives the Zacks Rank.

NINE has seen 2 beats and 1 miss in those three reports.  The miss was the most recent report.

Recent Report

NINE posted EPS of $0.37 when the Zacks Consensus Estimate was looking for $0.38.  THat one cent miss equates to a negative earnings surprise of a little more than 2%.

Earnings Estimates

Following the report, estimates moved lower.  The 2018 Zacks Consensus Estimate moved from $1.88 to $1.61.  That is not what investors want to see.

The 2019 Zacks Consensus Estimate moved from $3.28 to $3.10.

Those moves are the primary reason the stock slid to a Zacks Rank #5 (Strong Sell).

Energy And The Zacks Rank

Often times, an energy play is not moving in lockstep with estimate revisions.  This is the case for NINE right here as the estimates are moving lower and the stock is moving higher.  Some would say that this is not a sustainable move -- but others would look at the near term prices for energy such as oil and natural gas and see a closer correlation.

Chart

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