It has been about a month since the last earnings report for ProPetro Holding (PUMP - Free Report) . Shares have lost about 14.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ProPetro 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.
ProPetro Beats on Q1 Earnings & Revenues
ProPetro Holding reported strong first-quarter earnings on successful integration of the recently acquired Pioneer Natural Resources’ pressure pumping assets in the Permian Basin. The company’s impressive operating efficiency also aided the bottom line.
ProPetro’s net income per share came in at 67 cents, ahead of the Zacks Consensus Estimate of 62 cents and the year-ago period's bottom-line figure of 42 cents. Adjusted EBITDA in the first quarter amounted to $150.3 million, increasing substantially from $76.7 million a year ago. In the reported period, ProPetro’s adjusted EBITDA margin was 27.5%, which compares to 20% in the corresponding quarter of 2018.
Keeping with its earlier announcement, the company’s $400 million purchase of Pioneer Natural’s Permian pressure pumping assets led to an increase in ProPetro’s current base to 1,415,000 horsepower across 28 hydraulic fracturing fleets.
ProPetro’s revenues of $546.2 million improved 41.8% year over year and came above the Zacks Consensus Estimate of $524 million.
Pressure Pumping Division
ProPetro, through its Pressure Pumping division, provides hydraulic fracturing, cementing and acidizing functions. The business accounted for 97.4% of the company's total revenues in the quarter under review.
Costs & Expenses
ProPetro reported cost of services of $381.5 million in first-quarter 2019, 28% higher than the year-ago quarter. Meanwhile, general and administrative expenses came in at around $18.5 million, up from $11.9 million in the year-ago period.
Balance Sheet & Capital Expenditure
As of Mar 31, ProPetro had cash and cash equivalents of $79.5 million while its long-term debt was $160 million – for a negative net cash position. The company’s debt-to-capitalization ratio was 15.5%. ProPetro also has $76.6 million available under the revolving credit facility.Capital expenditure for the three months reached $86.1 million.
Guidance & Electric Fracking Foray
ProPetro expects an average of 26 effective fleets in the second quarter, down from 26 in the first quarter of 2019. Importantly, the company is making its foray in the electric fracking technology following the announcement to buy two such DuraStim fleets. To be delivered by late 2019, these 36,000 horsepower DuraStim fleets – boasting of fuel efficiency and lower costs – will be deployed under dedicated agreements with clients.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 5.81% due to these changes.
At this time, ProPetro has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ProPetro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.