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ProPetro (PUMP) Up 12.2% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for ProPetro Holding (PUMP - Free Report) . Shares have added about 12.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ProPetro due for a pullback? 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 drivers.

ProPetro Incurs Wider-Than-Expected Q2 Loss, Revenues Beat

ProPetro reported second-quarter adjusted net loss of 8 cents per share, wider than the Zacks Consensus Estimate of a loss of 6 cents. This underperformance was due to escalated service costs.

However, the bottom line narrowed from the year-ago quarter’s loss of 26 cents per share attributable to better-than-expected revenue contribution from the Pressure Pumping unit. The segment reported revenues of $213.5 million, outpacing the consensus mark of $200 million.

Quarterly revenues of $216.89 million outpaced the Zacks Consensus Estimate of $203 million and also increased from the year-ago quarter’s $106.11 million.

This oilfield service provider’s adjusted EBITDA in the second quarter amounted to $36 million, up from $25.4 million in the year-ago quarter. Full-quarter contributions from fleet reactivation during the first quarter of this year led to the increase in Adjusted EBITDA.

ProPetro’s adjusted EBITDA of $46.83 million in its Pressure Pumping unit during the June quarter surpassed the Zacks Consensus Estimate of $46.36 million. Investors should know that pressure pumping is the main contributor to the company’s earnings.

Pressure Pumping Division

The Midland, TX-based company provides hydraulic fracturing, cementing and acidizing functions through the Pressure Pumping segment. The business contributed 98.4% to the company's total revenues in the quarter under review. Service revenues soared 105.6% from the prior-year quarter’s levels to $213.5 million, attributable to higher fleet strength and a stable operating environment following the first-quarter weather woes.

Costs & Expenses

ProPetro reported service cost of $162.8 million for the second quarter, up 138.7% from the year-ago quarter’s level. General and administrative expenses were $17.53 million, down 13.6% from $20.3 million in the prior-year quarter.

Balance Sheet & Capital Expenditures

As of Jun 30, 2021, ProPetro had cash and cash equivalents worth $72.7 million and did not incur any long-term debt. It also had $68 million under its revolving credit facility. Capital expenditures in the June quarter of 2021 summed $31 million, up 160.5% from the second-quarter 2020 level.

Guidance

ProPetro expects full-year capital expenditures in the $115-$130 million range, based on its current and expected activity levels. It allocated approximately $37 million to its Tier IV DGB dual-fuel equipment investment of 90,000 HHP while the rest constitutes maintenance spending, mainly.

ProPetro CEO Phillip Gobe said, “Our commitment to our employees, customers and stakeholders will continue to bolster the value proposition for our company. We believe, the pressure pumping industry is faced with an impending reinvestment cycle that will require innovative solutions to meet the needs of the market. We believe, ProPetro's focused business model, commitment to innovation, capital discipline and conservative capital structure will result in a sustainable company going forward that is well positioned for the future.”


How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 11.77% due to these changes.

VGM Scores

At this time, ProPetro has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, ProPetro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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