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Core Laboratories (CLB) Down 17.7% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Core Laboratories N.V. (CLB - Free Report) . Shares have lost about 17.7% in that time frame, underperforming the market.

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

Core Laboratories Q2 Earnings Top Estimates, Sales Lag

Oilfield services company Core Laboratories reported second-quarter 2017 adjusted diluted earnings of $0.52 per share, surpassing the Zacks Consensus Estimate of $0.50. Further, this compares favorably with the prior-year quarter adjusted earnings of $0.35.

The better-than-expected results were primarily driven by improvement in the top line and a significant rise in the operating income from the product enhancement operations.

Total revenue of $163.9 million missed the Zacks Consensus Estimate of $168 million. Industry shortages of completion crews and equipment led to fewer-than-expected completions, resulting into lower revenues. However, revenues were up compared to the prior-year quarter level of $148.1 million.

Segment Performance

Reservoir Description: Segment revenues were $104.3 million compared with $108.3 million in second-quarter 2016. Lower activity levels in the international and offshore markets affected results negatively.

Operating income (excluding foreign exchange losses) for the segment was about $18.7 million in the reported quarter compared with $20.1 million in the prior-year quarter. Operating margin for the reported quarter was around 18%.

Production Enhancement: Segment revenues were approximately $59.6 million in the reported quarter as against $39.8 million in second-quarter 2016. Increased U.S. land activity levels helped in generating better revenues.

Operating income (excluding foreign exchange losses) for the segment was about $10.8 million in the reported quarter compared with $247,000 in the prior-year quarter, reflecting a significant rise of 4258.3%. Usage of technologically advanced products and enhancement of their stimulation programs contributed to increased margins.

Balance Sheet and Free Cash Flow

As of Jun 30, 2017, Core Laboratories had cash and cash equivalents of $14.3 million and long-term debt of around $233.7 million. The debt-to-capitalization ratio of the company in the reported quarter is 60%. Capital Expenditures for the second quarter were $2.9 million.

The company generated free cash flow of approximately $15.8 million in second-quarter 2017.

Quarterly Dividend

On Jul 6, board of directors announced to pay a cash dividend of $0.55 per share. Notably, this is same as the previous payout. The dividend will be paid on Aug 14 to shareholders on record as of Jul 17.

Guidance

For the third quarter, Core Laboratories expects earnings to lie between 54–56 cents per share. The company expects third-quarter revenues to lie between $165.5 and $170 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Core Laboratories N.V. Price and Consensus

 

VGM Scores

At this time, the stock has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% for this investment strategy.

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

The company's stock is suitable solely for growth based on our styles scores.

Outlook

The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.




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