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Here's Why Cactus (WHD) Has Rallied 2% Since Q1 Earnings

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Cactus, Inc.’s (WHD - Free Report) shares have improved almost 2% since it beat earnings and revenues estimates for first-quarter 2021, the results of which were announced on May 5. The stock has also been aided by investor optimism that demand for the company’s highly engineered wellhead and pressure control equipment will continue to rise.

Q1 Results

The company announced first-quarter 2021 adjusted earnings of 11 cents per share, surpassing the Zacks Consensus Estimate by a penny. However, the bottom line declined from 41 cents a year ago.

It recorded total revenues of $84 million, which beat the Zacks Consensus Estimate of $82 million but declined from the year-ago quarter’s $154 million.

The company’s better-than-expected results were owing to higher sales of wellhead and production related equipment, backed by improved drilling activities in the United States. This was offset partially by higher equipment reactivation costs.

Cactus, Inc. Price, Consensus and EPS Surprise

 

Cactus, Inc. Price, Consensus and EPS Surprise

Cactus, Inc. price-consensus-eps-surprise-chart | Cactus, Inc. Quote

Business Segments

From the Product business, the company generated revenues of $51.9 million, declining from $87 million in the March quarter of 2020. Gross profit from the business unit was recorded at $15.4 million, down from the year-ago quarter’s $30.9 million. Cost inflation primarily hurt the segment, partially offset by higher sales of wellhead and production related equipment.

The company’s Rental revenues were recorded at $12.5 million, down from $36.2 million in the year-ago quarter. Gross income from the Rental unit was $0.3 million, plummeting from the year-ago profit of $16.8 million. The segment suffered as a result of higher equipment reactivation costs.

From the Field Service and Other business segment, it generated revenues of almost $20 million, down from nearly $31 million in the year-ago quarter. Gross profit from the business unit was $5.5 million, down from the year-ago quarter’s $7.1 million. A decline in labor and equipment utilization hurt the segment.

Expenses

The cost of product revenues was recorded at $36.5 million, which plummeted from $56.1 million in the year-ago quarter. Also, cost of rental revenues was reported at $12.2 million, down from $19.3 million in the March quarter of 2020. The cost of field service and other revenues fell to $14.5 million from $23.8 million a year ago. As such, total expenses decreased to $72.8 million from the year-ago level of almost $114 million.

Capex and Cash Flow

The company’s first-quarter 2021 capital expenditures were recorded at $2.4 million, down from the year-ago period’s $9.4 million. For the first quarter, operating cash flow came in at $15.7 million.

Balance Sheet

At first quarter-end, Cactus had cash and cash equivalents of $291.9 million. It has no bank debt outstanding as of Mar 31, 2021.

Guidance

For 2021, the company projects capital spending in the band of $10 to $15 million.

Zacks Rank & Stocks to Consider

Cactus currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation (WLL - Free Report) , Continental Resources, Inc. (CLR - Free Report) and Matador Resources Company (MTDR - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

Matador is likely to see earnings growth of 300% in 2021.

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