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Oil Stocks Queued up for Q2 Earnings: NDRO, ESES, SDPI

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We are now at the tail end of the second-quarter earnings season, with 90.8% of the S&P 500 members having reported already (as of Aug 10).

Q2 Earnings So Far

So far, we have second-quarter results from 454 S&P 500 members that combined account for 92.1% of the index’s total market capitalization. Total earnings for these companies are down 3.7% from the same period last year and revenues have also declined 0.7%. Coming to the beat ratio, 71.1% have come up with positive earnings surprises and 52.9% have surpassed revenue estimates as per the Earnings Trends report dated Aug 10.

Energy Sector During Q2   

Expectedly, the ‘Energy’ sector has been a big drag on the aggregate growth picture. Of the sector components on the S&P 500 index that have reported results, total earnings are down 78.9% on 24.4% lower revenues.

But the sector’s results are so far better than expected, with 70.3% of the companies beating on earnings.

How was Q2 for Oil Stocks?

The second quarter saw crude advancing more than 26% sequentially − the best quarterly percentage gain in seven years. During the quarter, oil price improved significantly from mid-February, when West Texas Intermediate (WTI) crude fell to a 12-year low mark of $26.05 per barrel. Moreover, in June, oil prices settled above the psychologically important $50 per barrel level for the first time in more than 10 months.  

Definitely, it was favorable for companies involved in oil exploration and production activities as upstream players were able to sell the commodity at much higher prices. The quarter seems favorable for oilfield services firms also as these companies usually help upstream players in efficiently setting up oil and gas wells.

Let’s take a look at the expected earnings performance of three oil stocks that are expected to post second-quarter results soon.

Enduro Royalty Trust – anticipated to release quarterly earnings on Aug 12–posted an average earnings surprise of 0.00% over the last four quarters.

An earnings beat is uncertain for Enduro Royalty this time around. This is because, as per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

For the quarter to be reported, Enduro Royalty as an Earnings ESP of 0.00%, while it carries a Zacks Rank #3.

ENDURO ROYLT TR Price and EPS Surprise

Eco-Stim Energy Solutions Inc. (ESES - Free Report) is scheduled to report on Aug 15. The company failed to beat the Zacks Consensus Estimate in each of the prior four quarters, ending up with an average miss of 35.60%. On top of that, our model does not indicate that the company is likely to beat on earnings this time around. This is because Eco-Stim Energy is a Zacks Rank #3 stock and carries an Earnings ESP of 0.00%.

ECO-STIM ENERGY Price and EPS Surprise

Superior Drilling Products Inc. (SDPI - Free Report) will likely report on Aug 12. Over the last four quarters, the company’s average earnings miss came at 75.00%. Our proprietary model is not showing the possibility of an earnings beat this quarter. This is because the company carries a Zacks Rank #3 and has an Earnings ESP of 0.00%.

SUPERIOR DR PRO Price and EPS Surprise

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