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Why Is Ensco (ESV) Down 14.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Ensco (ESV - Free Report) . Shares have lost about 14.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ensco 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.

Ensco Q3 Loss Narrower Than Expected, Revenues Beat

Ensco reported diluted third-quarter 2018 loss of 33 cents a share, narrower than the Zacks Consensus Estimate of a loss of 35 cents. The company reported a loss of 5 cents in the year-ago quarter.

Total revenues amounted to $431 million, down from $460 million in the year-ago quarter. Nevertheless, the top line beat the Zacks Consensus Estimate of $423 million.  

The company’s results were impacted by lower realized dayrates and higher depreciation costs. These factors were partially offset by higher utilization as well as lower general and administrative expenses.

Segmental Performance

Floaters: Revenues were $241.8 million compared with $291.9 million in the prior-year quarter. The downside was primarily due to the sale of ENSCO 6001.Decline in the average day rate to $239,196 from $334,218 in the year-ago quarter’s level was another factor.

Reported utilization was 46%, unchanged from the year-ago quarter’s tally. Adjusted for uncontracted rigs and planned downtime, operational utilization was 97% compared with 99% in the prior-year quarter.

Jackups: Revenues were $173.3 million compared with $153.1 million in the prior-year quarter. This was due to a decline in average day rates to $79,921 from $88,272 in the prior-year quarter.

Reported utilization was 66% compared with 60% in third-quarter 2017. Adjusted for uncontracted rigs and planned downtime, operational utilization in the reported quarter was 98% as against 99% in the year-ago quarter.

Other: Revenues increased to $15.8 million from $15.2 million in third-quarter 2017. Contract drilling expenses rose to $15.1 million from $13.8 million in the year-ago quarter.

Costs and Expenses

Depreciation expenses jumped to $120.6 million from $108.2 million in third-quarter 2017. This was due to the inclusion of Atwood rigs and three newbuilds to the fleet. General and administrative expenses fell to $25.1 million from $30.4 million in the prior-year quarter, mainly due to transaction costs relating to the acquisition of Atwood.

Balance Sheet and Capex

At the end of the third quarter, Ensco had $196 million in cash and cash equivalents. Long-term debt (including current maturities) was $5,002.6 million, with net debt-to-capitalization ratio of 37.6%.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Ensco has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Ensco has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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