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RPC (RES) Down 16% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for RPC (RES - Free Report) . Shares have lost about 16% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is RPC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

RPC Q2 Earnings Beat, Revenues Miss Estimates

RPC, Inc. reported break-even earnings per share for second-quarter 2021, beating the Zacks Consensus Estimate of a loss of 2 cents and comparing favorably with the year-ago loss of 10 cents.

Total quarterly revenues were $188.8 million, which missed the Zacks consensus mark of $206 million. The top line, however, significantly improved from the year-ago figure of $89.3 million.

The earnings beat was mainly backed by higher operating profits in the Technical Services segment. The positives were partially offset by higher cost of revenues. Significant operational delays and extreme rain experienced in the Permian Basin also affected the quarterly activity levels.

Segmental Performance

Operating profit in the Technical Services segment totaled $1.4 million against a loss of $34.1 million in the year-ago quarter. The improvement can be attributed to higher activity levels in most of the service lines.

Operating loss in the Support Services segment came in at $2.4 million, wider than the unit’s operating loss of nearly $2 million in the year-ago quarter. The downside was caused by lower activities.

Total operating loss for the quarter was $1.2 million, significantly narrower than the year-ago loss of $37.5 million. Average domestic rig count was 453 for the June-end quarter, reflecting a 15.6% increase from the year-ago level.

Cost and Expenses

Cost of revenues increased from $80 million in second-quarter 2020 to $145.8 million. Selling, general and administrative expenses increased to $29.4 million from the year-ago figure of $28.8 million.

The increased cost of revenues was mainly due to higher expenses, consistent with higher activity levels and higher fuel costs.

Financials

RPC’s total capital expenditure for the June-end quarter of 2021 amounted to $14.1 million.

As of Jun 30, the company had cash and cash equivalents of $121 million, up sequentially from $85.4 million reported in the first quarter. Despite the volatile market scenario, it maintained a debt-free balance sheet.

Guidance

For 2021, RPC expects a capital expenditure of $65 million, marking an increase from the previously mentioned $55 million.

As of Jun 30, 2021, the company spent $25.9 million of the total revised capex guidance. For the rest of 2021, the remaining capex will be directed mostly toward capitalized maintenance and upgrades of its existing equipment, which includes selected pressure pumping equipment for dual-fuel capability.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted 33.33% due to these changes.

VGM Scores

At this time, RPC has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

RPC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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