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What's in Store for U.S. Silica (SLCA) This Earnings Season?

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U.S. Silica Holdings, Inc. (SLCA - Free Report) is set to release fourth-quarter 2017 results before the opening bell on Feb 21.

Last quarter, the company logged a profit of $41.3 million or 50 cents per share against a net loss of $11.3 million or 17 cents in the prior-year quarter. U.S. Silica’s adjusted earnings were 53 cents per share for the quarter, beating the Zacks Consensus Estimate of 49 cents.

Revenues for the third quarter jumped 151% year over year to $345 million. It surpassed the Zacks Consensus Estimate of $328.6 million.

U.S. Silica surpassed the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 17.7%.

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Factors at Play

For the fourth quarter, U.S. Silica expects rising sand volumes and continued pricing upside in the Oil & Gas segment. However, this could be restrained by plant down time resulting from scheduled maintenance, some frac crews for extending their holiday time-off and brief outages at a few mines for capacity expansion work.

Regarding pricing, the company sees continued upside in oil and gas pricing during the fourth quarter.  For the Sandbox unit, the company expects to witness strong growth in the fourth quarter.

U.S. Silica’s total revenues for the fourth quarter is projected to increase roughly 4.3% sequentially from the third quarter, as the Zacks Consensus Estimate for total revenues is currently pegged at $359.8 million. Notably, the projected sales figure represents nearly two-fold jump from year-ago reported figure of $180 million.

Revenues for the company’s Oil & Gas division for the fourth quarter is projected to increase roughly 8% sequentially as the Zacks Consensus Estimate for the fourth quarter is pegged at $309 million. Last quarter, the company witnessed a roughly 230% year-over-year surge in sales for this segment, partly owing to higher volumes and higher pricing.

Moreover, the Zacks Consensus Estimate for Industrial and Specialty Products division’s revenues is projected at $51 million for the fourth quarter, reflecting an estimated 13.6% decline on a sequential basis. Last quarter, this segment’s performance was driven by a better mix of higher margin products sold during the quarter and a combination of strategic price increases.

U.S. Silica continues to evaluate opportunities for greenfield expansions in the fast-growing Permian Basin. The company has started the construction of a new frac sand mine and plant in West Texas to cater the Permian basin.

U.S. Silica also remains focused on pursuing acquisitions of complementary businesses or assets. The purchase of logistics solutions provider, Sandbox Enterprises enabled U.S. Silica to offer customers significantly improved transportation and operating efficiencies and meaningful cost savings relative to the existing delivery systems. Growth of Sandbox business is driving sales and margins in the Oil and Gas unit and is expected to make a major contribution for full-year 2017.  

U.S. Silica’s shares have declined 7.7% in the last three months, underperforming the 17% growth recorded by its industry.


Earnings Whispers

Our proven model does not conclusively show that U.S. Silica is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Zacks ESP: Earnings ESP for U.S. Silica for the fourth quarter is -5.60%. This is because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 52 cents and 55 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: U.S. Silica currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult.  

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows they too have the right combination of elements to post an earnings beat this quarter:

Franco-Nevada Corporation (FNV - Free Report) has an Earnings ESP of +0.46% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman Corporation (HUN - Free Report) has an Earnings ESP of +2.22% and a Zacks Rank #2.

Ferroglobe PLC (GSM - Free Report) has an Earnings ESP of +61.77% and carries a Zacks Rank #3.

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