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Cactus (WHD) Stock Dips 11% Despite Posting Strong Q1 Earnings

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Cactus, Inc. (WHD - Free Report) shares have declined 11% despite reporting strong earnings for the first quarter of 2022. Increasing costs and expenses are restraining the company from reaching its potential profitability gains, concerning investors.

The company reported first-quarter adjusted earnings of 30 cents per share, beating the Zacks Consensus Estimate by a penny. The bottom line rose from the year-ago quarter’s 11 cents.

Total quarterly revenues of $146 million outpaced the Zacks Consensus Estimate of $142 million. The top line improved from the year-ago quarter’s $84.4 million.

The strong first-quarter results were supported by higher sales of wellhead and production-related equipment, resulting from improved U.S. drilling activities.

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, Cactus generated revenues of $94 million, increasing from $52 million in the March-end quarter of 2021. Gross profit from the business unit was recorded at $33.1 million, up from the year-ago quarter’s $15.4 million. The segment was supported by increased U.S. drilling activity, which triggered sales of wellhead and production-related equipment.

Cactus’ Rental revenues were $22.3 million, up from $12.5 million in the year-ago quarter. Gross income from the Rental unit was $7.3 million, which increased from the year-ago quarter’s $0.3 million. The segment was supported by higher customer completion activity.

From the Field Service and Other business segment, Cactus generated revenues of $29.5 million, up from $20 million in the year-ago quarter. Gross profit from the business unit was $4.7 million, down 14.5% year over year due to higher labor, fuel and third-party service expenses. The negatives were partially offset by increased customer activities, resulting in higher billable hours.

Expenses

The cost of product revenues was $60.9 million, which jumped from $36.5 million in the year-ago quarter. Also, the cost of rental revenues was reported at $15.1 million, up from $12.2 million in the March-end quarter of 2021. The cost of field service and other revenues increased to $24.8 million from $14.5 million a year ago. As such, total expenses jumped to $115 million from the year-ago level of $72.8 million.

Capex and Cash Flow

Cactus’ first-quarter 2022 cash investment amount was $7.3 million. For the reported quarter, operating cash flow was $17.2 million.

Balance Sheet

At the first-quarter end, Cactus had cash and cash equivalents of $297.7 million. It had no bank debt outstanding as of Mar 31, 2022.

Guidance

For 2022, Cactus projects a net capital expenditure of $20-$30 million.

Being a manufacturer and designer of highly engineered wellhead and pressure-control equipment, Cactus expects revenue growth to continue across all of its business lines in the June-end quarter of this year.

Zacks Rank & Stocks to Consider

Cactus currently carries a Zacks Rank #3 (Hold).

Investors interested in the energy sector might look at the following stocks that reported solid first-quarter earnings numbers and presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PBF Energy Inc. (PBF - Free Report) reported first-quarter earnings of 35 cents per share, beating the Zacks Consensus Estimate of earnings of 26 cents. The strong quarterly results were aided by increased contributions from the Refining segment.

PBF Energy’s operating income from the Refining segment was $146.1 million, improving from $85.9 million a year ago. The gross refining margin per barrel of throughput was $11.03 for the East Coast, up from $2.48 in the year-ago quarter.

Range Resources Corporation (RRC - Free Report) reported first-quarter 2022 adjusted earnings of $1.18 per share, beating the Zacks Consensus Estimate of $1.15 per share. The strong quarterly earnings can be attributed to higher realizations of commodity prices.

In first-quarter 2022, Range Resources’ board of directors approved a $500-million share repurchase program. At the first-quarter end, RRC had total debt of $1,829.7 million. It had a debt-to-capitalization of 53.3%.

Upstream operator PDC Energy  reported adjusted earnings per share of $3.66, comfortably beating the Zacks Consensus Estimate of $3.18. The outperformance can be primarily attributed to the better-than-anticipated production volumes and higher commodity prices.

PDC Energyis using the excess cash from a supportive environment to reward investors with dividends and buybacks. PDCE’s board of directors declared a quarterly cash dividend of 25 cents per share to its common shareholders. PDC Energy paid out $110 million to its shareholders in the first quarter through dividends and buybacks.


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