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Core Labs (CLB) Slashes Q2 Guidance, Shares Plunge 13.6%

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Core Laboratories N.V.’s (CLB - Free Report) shares declined more than 13.5% to eventually close at $112.66 on Jul 2, after the company downwardly revised its second-quarter 2018 outlook amid deferred international activities.

In its first-quarter report, the company forecast second-quarter earnings of around 64-68 cents per share. However, a delay in the recovery of international oilfield development activities has compelled the company to cut its guidance. Hence, it now expects total revenues in the band of $174-$175 million against the prior guided range of $177-$179 million. It now anticipates EPS within 57-58 cents. However, while Core Laboratories’ second-quarter guidance has been trimmed, the revised EPS still marks year-over-year and sequential improvement.

Core Laboratories primarily operates in two principal business lines: Reservoir Description and Product Enhancement. While the company’s Product Enhancement segment will continue generating strong results, Reservoir Description will bear the brunt of reduced revenues as most (almost 85%) of the segment’s income is based on international activity levels. Delayed activities in the North Sea, Middle East and Asia-Pacific regions as well as the Gulf of Mexico will impact its revenues. Higher ramp-up costs related to deployment of new laboratory technology and infrastructure are also expected to hurt the segment’s operating income.

Further, the company anticipates sluggishness in the international activities to continue in the third quarter. However, its results are expected to start picking up from the fourth quarter.

Zacks Rank & Key Picks

Core Laboratories currently has a Zacks Rank #3 (Hold).

Some better-ranked players in the same space are China Oilfield Services Limited , Emerge Energy services LP (EMES - Free Report) and Archrock, Inc. (AROC - Free Report) . While China Oilfield Services sports a Zacks Rank #1 (Strong Buy), Emerge Energy and Archrock carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

China Oilfield Services’ 2018 earnings are expected to increase 5,300% year over year.

Solaris Oilfield’s earnings for 2018 are expected to increase 260.4% year over year.

Archrock’s 2018 earnings are expected to increase 210% year over year.

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