Fracking sand player and fuel processor Emerge Energy Services L.P. (EMES) is set to release its fourth-quarter 2014 results on Monday, Mar 2.
In the preceding three-month period, Emerge Energy Services delivered a positive 22.73% earnings surprise. Moreover, the partnership’s earnings have outpaced the Zacks Consensus Estimate in three of the last four quarters, leading to an average beat of 7.25%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Emerge Energy Services’ fuel processing and distribution unit has been posting robust growth in terms of volume, revenues as well as earnings.
However, the ongoing slump in crude prices is sure to take its toll on the partnership’s fourth quarter results due to cutbacks in the production of the lucrative (and high margin) fracking sand that is used as a proppant by exploration and production companies.
Additionally, the partnership’s high leverage and miniscule cash in hand makes Emerge Energy Services vulnerable to even a small decline in revenue and earnings.
Earnings Whispers
Our proven model does not conclusively show that Emerge Energy Services is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.77%. The Most Accurate estimate for Emerge Energy Services stands at $1.15, while the Zacks Consensus Estimate is pegged lower at $1.13.
Zacks Rank: However, Emerge Energy Services’ Zacks Rank #5 (Strong Sell), when combined with a positive ESP makes surprise prediction difficult.
As it is, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
While earnings beat looks uncertain for Emerge Energy Services, here are some energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:
Global Partners L.P. (GLP) has an Earnings ESP of +75.00% and a Zacks Rank #2 (Buy). The partnership is expected to release earnings on Mar 12.
Atlas Resource Partners L.P (ARP) has an Earnings ESP of +44.44% and a Zacks Rank #3 (Hold). The partnership is likely to release earnings on Mar 2.
Ferrellgas Partners L.P. (FGP) has an Earnings ESP of +1.82% and a Zacks Rank #3. The partnership is slated to release earnings on Mar 9.
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