FMC Technologies, Inc. (FTI) is set to release fourth-quarter 2014 financial results after the closing bell on Feb 10.
The oilfield equipment manufacturer has surpassed the Zacks Consensus Estimate in three of the trailing four quarters and has an average positive surprise of 11.78%. Let’s see how things are shaping up for this announcement.
Factors Likely to Affect Earnings
FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. Moreover, the company is particularly well-positioned in the subsea systems market. The company boasts of a strong backlog – nearly $7 billion. This reflects a steady demand from its customers and also offers long-term earnings and cash flow visibility.
Additionally, during the third-quarter results, FMC Technologies upped 2014 earnings per share guidance to $2.75−$2.85 from $2.70−$2.80. The company expects strong results from the Surface Technologies segment and a positive outlook on the North American market.
However, FMC Technologies is positioned in an industry that is witnessing a downtrend as a result of plunging crude prices. This may reflect negatively on the company’s upcoming earnings.
Earnings Whispers
Our proven model does not conclusively show that FMC Technologies is likely to beat earnings estimates 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. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.28%. This is because the Most Accurate estimate is at 79 cents while the Zacks Consensus Estimate is pegged at 78 cents.
Zacks Rank: FMC Technologies carries a Zacks Rank #4 (Sell) which complicates the forecasting power of ESP. As such, we caution investors against Sell-rated stocks (#4 and 5) going into the earnings announcements.
Stocks to Consider
Here are some companies from the same space which, according to our model, have the right combination of elements to post an earnings beat this quarter.
LRR Energy L.P (LRE) with an Earnings ESP of +3.13% and a Zacks Rank #2 (Buy). The partnership is expected to release earnings on Mar 3.
Tesoro Corporation (TSO) with an Earnings ESP of +1.35% and a Zacks Rank #2. The company will likely release earnings on Feb 11.
Seadrill Partners LLC (SDLP) with an Earnings ESP of +10.53% and a Zacks Rank #3 (Hold). The partnership is likely to release earnings on Feb 26.
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