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Weatherford (WFT) to Report Q1 Earnings: What's in the Cards?

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Weatherford International Ltd. is expected to report first-quarter 2018 earnings on Apr 24, after the closing bell.

In the last reported quarter, the leading oilfield services company delivered a negative earnings surprise of 57.1%. Weatherford posted average negative earnings surprise of 13% for the trailing four quarters.
 

Let’s see how things are shaping up prior to the announcement.

Factors Likely to Influence Results

The commodity pricing scenario reflected immense improvement in the first quarter of 2018. Oil and gas prices were above $60 per barrel in all the three months. The average monthly price of West Texas Intermediate (WTI) crude per barrel January, February and March of 2018 was recorded at $63.70, $62.23 and $62.73, respectively, per the U.S. Energy Information Administration. Notably, the average monthly WTI crude price has never touched $60 since 2015. Crude rally was primarily supported by consistent production curbs from OPEC and its allies.

Additionally, start of fresh U.S. oilfield services contracts, following the rise in oil prices, will favor growth.

Weak commodity prices can significantly lower oilfield service contracts for Weatherford. Also, the company is laden with huge debt load, which is indicated by the rise in its long-term debt to $7,541 million from nearly $5,852 million during 2016. Also, cash balances plunged more than 40% annually. Hence, plummeting cash balances along with huge debt load reflect balance sheet weakness.

Earnings Whisper

Our proven model does not show that Weatherford is likely to beat on earnings this quarter. This is because a stock needs to have 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, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.72%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Weatherford has a Zacks Rank #3.

Please note that we caution investors 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.

Q1 Price Performance

During the quarter, Weatherford’s shares lost 45.1% compared with 9.7% decline of its industry.



 

Stocks to Consider

Here are some companies that you may consider as our model shows that these have the right combination of elements to deliver an earnings beat this quarter.

Based in Houston, United States, Solaris Oilfield Infrastructure, Inc. (SOI - Free Report) manufactures as well as provides patented mobile proppant management systems which unload, store and deliver proppant at oil and natural gas well sites. The company has an Earnings ESP of +2.89% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources, Inc is an independent oil and natural gas exploration and production company. The company has an Earnings ESP of +9.08% and sports a Zacks Rank #3.

Houston, TX-based EOG Resources, Inc (EOG - Free Report) is a major independent oil and gas exploration and production company. The company has an Earnings ESP of +14.04% and a Zacks Rank #3.

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