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Core Laboratories (CLB) Down 25.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Core Laboratories (CLB - Free Report) . Shares have lost about 25.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Core Laboratories 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.
Core Laboratories Q4 Earnings In Line, Revenues Miss
Core Laboratories reported fourth-quarter 2019 results, wherein adjusted earnings of 38 cents a share were in line with the Zacks Consensus Estimate of 38 cents. The company’s earnings were driven by cost-control initiatives and operational efficiencies. However, the profit was below the company’s previous guidance of 37-38 cents and declined from the year-ago quarter’s earnings of 48 cents. The downside was caused by steep decline in U.S. onshore activity during the fourth quarter.
Meanwhile, this oilfield service provider delivered adjusted revenues of $156.8 million, beating the Zacks Consensus Estimate of $155 million. The top line also came above the company’s guidance of $154-$156 million. However, it fell from the year-ago quarter’s revenues of $173.2 million.
Segmental Performance
Reservoir Description: Revenues fell 3.7% to $102.6 million from $106.6 million in fourth-quarter 2018 thanks to slower-than-expected progression on international projects and steep decline in U.S. activity during the quarter under review. Adjusted operating income inched up 0.6% year over year to $17 million. As such, operating margin came in at 17% compared with 16% in the prior-year quarter.
Production Enhancement: Revenues were approximately $54.2 million compared with $66.7 million in fourth-quarter 2018. Segmental operating income was about $7.5 million in the quarter, down 35% from the year-ago quarter’s level of $11.6 million. Operating margin declined to 14% from the year-ago quarter’s figure of 17%. The segmental underperformance is due to a steep decline in U.S. onshore well completion activity.
Financials and Dividend
As of Dec 31, 2019, Core Labs had cash and cash equivalents of around $11.1 million and long-term debt (including lease obligations) of approximately $305 million. The company’s debt-to-capitalization ratio was 62.6%.
In the quarter, Core Labs generated $21 million in operating cash and its capital expenditure totaled $4.7 million. This further led to the $16.6 million free cash flow (FCF) generation. Markedly, this is the 73rd consecutive quarter of the company’s FCF recognition.
With an aim to preserve its strong balance sheet, the board of directors declared a quarterly cash dividend of 25 cents per share, down from previous dividend of 55 cents per share. The amount is payable in the first quarter to its shareholders of record as of Jan 24.
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Core Labs expects first-quarter 2020 revenues in the range of $159-$164 million range on the back of moderate improvement in the U.S. land activity throughout the period compared with the exit rate of 2019. Operating income is anticipated in the $25-$27 million band with operating margin being estimated at 16%. The company foresees first-quarter earnings per share in the bracket of 39-41 cents.
Core Labs expects factors associated with the global crude oil market to create a tighter market in the second half of 2020. Long-term international projects will attract sustained level of capital investment, which is required to replace decline in production from mature fields. Consequently, the company foresees international activity to grow by mid-single digit in 2020.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Core Laboratories 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
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Core Laboratories has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Core Laboratories (CLB) Down 25.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Core Laboratories (CLB - Free Report) . Shares have lost about 25.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Core Laboratories 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.
Core Laboratories Q4 Earnings In Line, Revenues Miss
Core Laboratories reported fourth-quarter 2019 results, wherein adjusted earnings of 38 cents a share were in line with the Zacks Consensus Estimate of 38 cents. The company’s earnings were driven by cost-control initiatives and operational efficiencies. However, the profit was below the company’s previous guidance of 37-38 cents and declined from the year-ago quarter’s earnings of 48 cents. The downside was caused by steep decline in U.S. onshore activity during the fourth quarter.
Meanwhile, this oilfield service provider delivered adjusted revenues of $156.8 million, beating the Zacks Consensus Estimate of $155 million. The top line also came above the company’s guidance of $154-$156 million. However, it fell from the year-ago quarter’s revenues of $173.2 million.
Segmental Performance
Reservoir Description: Revenues fell 3.7% to $102.6 million from $106.6 million in fourth-quarter 2018 thanks to slower-than-expected progression on international projects and steep decline in U.S. activity during the quarter under review. Adjusted operating income inched up 0.6% year over year to $17 million. As such, operating margin came in at 17% compared with 16% in the prior-year quarter.
Production Enhancement: Revenues were approximately $54.2 million compared with $66.7 million in fourth-quarter 2018. Segmental operating income was about $7.5 million in the quarter, down 35% from the year-ago quarter’s level of $11.6 million. Operating margin declined to 14% from the year-ago quarter’s figure of 17%. The segmental underperformance is due to a steep decline in U.S. onshore well completion activity.
Financials and Dividend
As of Dec 31, 2019, Core Labs had cash and cash equivalents of around $11.1 million and long-term debt (including lease obligations) of approximately $305 million. The company’s debt-to-capitalization ratio was 62.6%.
In the quarter, Core Labs generated $21 million in operating cash and its capital expenditure totaled $4.7 million. This further led to the $16.6 million free cash flow (FCF) generation. Markedly, this is the 73rd consecutive quarter of the company’s FCF recognition.
With an aim to preserve its strong balance sheet, the board of directors declared a quarterly cash dividend of 25 cents per share, down from previous dividend of 55 cents per share. The amount is payable in the first quarter to its shareholders of record as of Jan 24.
View
Core Labs expects first-quarter 2020 revenues in the range of $159-$164 million range on the back of moderate improvement in the U.S. land activity throughout the period compared with the exit rate of 2019. Operating income is anticipated in the $25-$27 million band with operating margin being estimated at 16%. The company foresees first-quarter earnings per share in the bracket of 39-41 cents.
Core Labs expects factors associated with the global crude oil market to create a tighter market in the second half of 2020. Long-term international projects will attract sustained level of capital investment, which is required to replace decline in production from mature fields. Consequently, the company foresees international activity to grow by mid-single digit in 2020.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Core Laboratories 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
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Core Laboratories has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.