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Liberty (LBRT) Down 23.8% Since Wider-Than-Expected Q3 Loss

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The stock of Denver-CO-based Liberty Oilfield Services Inc (LBRT - Free Report) has lost around 23.8% since its third-quarter earnings announcement on Oct 26. The company’s worse-than-expected bottom-line performance and investor scepticism, fuelled by the prevailing supply chain challenges in the industry and continued cost inflation, triggered the negative reaction.

What Did Liberty Oilfield’s Earnings Unveil?

Liberty Oilfield Services reported third-quarter 2021 loss per share of 22 cents, wider than the Zacks Consensus Estimate of a loss of 12 cents. The underperformance reflects the impact of ongoing logistics challenges, rising costs, and acquisition integration expenses on account of the onshore hydraulic fracturing business in the United States and Canada that the company purchased from Schlumberger (SLB - Free Report) in January.

However, the bottom line compared favorably with the year-ago quarter’s loss of 41 cents due to strong execution, higher activity and increased service pricing.

Total revenues came in at $653.7 million, above the Zacks Consensus Estimate of $615 million and surged from the year-ago level of $147.5 million.

Meanwhile, the third-quarter adjusted EBITDA was $32 million against the prior-year quarter figure of $1.4 million.

In its earnings release, the company also announced the acquisition of environment-friendly proppant delivery solutions provider PropX for $90 million that include $13.5 million in cash and $76.5 million worth Liberty common stock. The addition of PropX is expected to improve logistics efficiency and add innovation to Liberty’s portfolio.
 

Liberty Oilfield Services Inc. Price, Consensus and EPS Surprise

Liberty Oilfield Services Inc. Price, Consensus and EPS Surprise

Liberty Oilfield Services Inc. price-consensus-eps-surprise-chart | Liberty Oilfield Services Inc. Quote

 

Balance Sheet & Capital Expenditure

As of Sep 30, Liberty had approximately $34.7 million in cash and cash equivalents. The pressure pumper’s long-term debt of $121.1 million represented a debt-to-capitalization of 9.2%. Further, the company’s liquidity — cash balance, plus revolving credit facility — amounted to $268 million.

In the reported quarter, the company spent $56.2 million on its capital program.

Guidance

Liberty management sees strong commodity prices driving frac service usage — especially by private upstream operators — into the next year. In particular, the company’s environmental-friendly and sophisticated offerings provide it with a comparative advantage. At the same time, Liberty is not immune to macro issues like higher transportation costs, driver scarcity and labor shortages.

Zacks Rank & Stock Picks

Liberty currently carries a Zacks Rank #4 (Sell).

Some better-ranked players in the energy space are EOG Resources (EOG - Free Report) and Suncor Energy (SU - Free Report) . Both companies sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources has an expected earnings growth rate of 482.2% for the current year.

Suncor Energy has an expected earnings growth rate of 318.2% for the current year.