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Is a Beat in the Cards for ProPetro (PUMP) in Q4 Earnings?

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ProPetro Holding Corp. (PUMP - Free Report) is scheduled to release fourth-quarter 2019 results on Mar 31, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at 27 cents per share on revenues of $419.72 million.

Against this backdrop, let’s delve into the factors that might have impacted the company’s performance in the December quarter.

Factors to Consider for Q4 Results

ProPetro’s hydraulic fracturing horsepower is deployed in the Permian Basin, which is widely regarded as the dominant domestic growth area for onshore oil output. Surging volumes from this ‘super’ basin — currently producing just above 4 million barrels daily (almost double of the output produced two years ago) and expected to churn out another 1 million barrels per day by the first half of 2020 — should ensure continued work for ProPetro. The company, through its healthy leverage to the Permian Basin, is likely to have benefited from this multiyear upcycle by providing hydraulic fracturing and other well-completion services to the E&P firms.

ProPetro’s strong relationship with high-quality customers provides revenue visibility and business certainty. The clients — mostly well capitalized, blue-chip E&P companies with long-term production growth plans in the Permian Basin including the likes of Parsley Energy PE and XTO Energy, a subsidiary of ExxonMobil XOM — are expected to be less susceptible to commodity price fluctuations. This should ensure multiyear earnings stability for ProPetro.

In the last reported quarter, ProPetro’s revenues of $541.8 million improved 24.8% year over year and also came above the Zacks Consensus Estimate of $509 million, driven by an impressive operating efficiency and contribution from Pioneer Natural Resources’ PXD pressure pumping assets in the Permian Basin. This trend is likely to have continued in the fourth quarter as well.

What Does Our Model Say?

The proven Zacks model predicts an earnings beat for ProPetro this time around. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: ProPetro has an Earnings ESP of +23.46%.

Zacks Rank: ProPetro carries a Zacks Rank #3, which increases the predictive power of ESP. You can see the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q3 Earnings

ProPetro reported third-quarter 2019 net income per share of 33 cents, missing the Zacks Consensus Estimate of 48 cents and also declined from the year-ago bottom-line figure of 53 cents. This underperformance stems from tepid demand for the company’s services as its clients (the upstream energy players) take a cautious approach to capital spending amid soft oil and gas prices.   

As far as earnings surprises are concerned, this Midland, TX-based ProPetro beat the Zacks Consensus Estimate in two of the trailing four quarters, missing the same in the other two, the average being -14.71%. This is depicted in the graph below:

ProPetro Holding Corp. Price and EPS Surprise

ProPetro Holding Corp. Price and EPS Surprise

ProPetro Holding Corp. price-eps-surprise | ProPetro Holding Corp. Quote


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