Houston, TX-based oilfield machinery provider,Cameron International Corporation (CAM) is set to release fourth-quarter 2014 financial results before the opening bell on Jan 29, 2015.
Last quarter, the company had delivered a 5.41% positive earnings surprise. Moreover, Cameron has posted an average positive earnings surprise of 6.85% over the past four quarters. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Being a manufacturer of pressure control equipment − used in onshore, offshore, and subsea applications for oil drilling and production activities – Cameron’s business is positively correlated with crude price.
The oil pricing environment was extremely weak during the entire fourth quarter. This was primarily due to plentiful supply of crude in the face of lacklustre global demand. Starting from $90.74 per barrel on Oct 1, 2014, the West Texas Intermediate (WTI) crude price slid persistently to touch the below $55 per barrel mark in Dec 2014. As a result, most of the drillers suffered as there was low demand for drilling activities during the quarter. This in turn is expected to hamper the business of the oilfield machinery provider.
Earnings Whispers?
Our proven model does not conclusively show that Cameron is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP represent the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -1.67% for Cameron as the Most Accurate estimate stands at $1.18 while the Zacks Consensus Estimate is pegged higher at $1.20.
Zacks Rank: Cameron has a Zacks Rank #4 (Sell) which complicates the forecasting power of ESP. As such, we caution investors against Sell-rated stocks going into the earnings announcements.
Stocks to Consider
Here are some companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Spectra Energy Partner LP (SEP) has an Earnings ESP of +2.94% and a Zacks Rank #1 (Strong Buy). The partnership is expected to release earnings on Feb 4.
Valero Energy Partners LP (VLP) has an Earnings ESP of +3.33% and a Zacks Rank #2 (Buy). The company is slated to release earnings on Feb 5.
Tesoro Corporation (TSO) has an Earnings ESP of +1.40% and a Zacks Rank #2. The company is likely to release earnings on Feb 11.
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