About a month has gone by since the last earnings report for MRC Global Inc. (MRC - Free Report) . Shares have lost about 4.3% 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 the most recent earnings report in order to get a better handle on the important drivers.
Second-Quarter 2017 Highlights
MRC Global Inc. reported mixed second-quarter 2017 results.
Earnings: Quarterly adjusted earnings came in at 2 cents per share, a penny lower than the Zacks Consensus Estimate. The company had reported an adjusted loss of 21 cents per share in the year-ago quarter.
Revenues: Sales in the reported quarter came in at $922 million, surpassing the Zacks Consensus Estimate of $910 million. Notably, quarterly revenues came in 23.6% higher than the year-ago tally. The upsurge was backed by rise in well completion and customer spending activity in the upstream and midstream sectors.
MRC Global’s second-quarter sales in the United States totaled $720 million, up 31% year over year. This upside was stemmed by increased well completion and customer spending activity. Notably, ongoing projects with one major midstream gas transmission customer also supported the upswing.
International sales came in at $133 million, declining 6% year over year. The segmental sales weakened due to lower sales accrued from the company’s upstream and downstream sectors, as well as adverse foreign currency translation impact.
Revenues from Canada came in at $69 million, jumping 28% year over year. The year-over-year improvement was driven by milder spring break-up and increased rig count in the company’s upstream businesses.
Costs and Margins: Cost of sales during the quarter was $773 million compared with $621 million recorded in the year-ago quarter. Gross profit margin in the reported quarter came in at 16.2%, contracting 60 basis points year over year.
Selling, general and administrative expenses came in at $132 million, as against $135 million recorded in the year-earlier quarter.
Balance Sheet and Cash Flow: Existing the quarter, MRC Global had cash worth $37 million, significantly down from $109 million recorded on Dec 31, 2016. Long-term debt at the end of the second quarter was $402 million compared with $406 million recorded at the end of 2016.
In first-half 2017, MRC Global used $24 million cash from operations, as against $148 million cash generated in the comparable period last year. Capital expenditure during the quarter was $14 million, flat year over year.
Outlook: MRC Global believes that recovering conditions in the oil and gas markets will likely boost revenues and profitability in the quarters ahead.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions higher for the current quarter compared to four lower. In the past month, the consensus estimate has shifted lower by 8.7% due to these changes.
At this time, MRC Global's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. . Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.