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Will FMC Technologies (FTI) Miss on Q2 Earnings Estimates?

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Oilfield equipment manufacturer FMC Technologies, Inc. (FTI - Free Report) is scheduled to report second-quarter 2014 results on Jul 22, after the market closes.

Last quarter, FMC Technologies delivered a positive earnings surprise of 14.00% on the back of improvement in all its business segments, primarily the Subsea business. The company has delivered positive earnings surprises in three of the trailing four quarters and has an average earnings surprise of 5.54%. Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

FMC Technologies is poised to benefit from its dominance in the subsea market and its long-standing relationship with contact-awarding energy giants. Subsea backlogs are expected to remain robust under a favorable pricing environment. Additionally, as more companies venture to explore deepwater opportunities, FMC Technologies is poised to benefit from its competitive position and experience.

The company also expects growth from its surface technology segment due to improvement in the North American market. However, the company anticipates a sequential decline in surface technology margins, given its exposure to Canada.  

As is the case with other oil services and equipment suppliers, results for FMC Technologies are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces.

Moreover, the company’s operating areas include economically and politically volatile regions such as North Africa, West Africa, the Middle East, Latin America and the Asia Pacific. Instability and unforeseen changes in these markets may have an adverse impact on FMC Technologies’ operations and earnings.   

Earnings Whispers

Our proven model does not conclusively show that FMC Technologies is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:  The Earnings ESP for FMC Technologies is -6.35%. This is because the Most Accurate estimate of 59 cents per share is below the Zacks Consensus Estimate of 63 cents.
Zacks Rank: FMC Technologies’ Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.  

Stocks That Warrant a Look

Here are some other stocks in the energy sector you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Superior Energy Services, Inc. (SPN - Free Report) has an Earnings ESP of +2.44% and a Zacks Rank #2 (Buy).

Forum Energy Technologies, Inc. (FET - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank #2.

Pioneer Energy Services Corp. (PES - Free Report) has Earnings ESP of +33.33% and a Zacks Rank #2.

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