Onshore contract driller Nabors Industries Ltd. (NBR) is set to release fourth-quarter and full-year 2014 results after the closing bell on Mar 2.
Nabors has been a consistent performer in terms of earnings. The company has beaten the Zacks Consensus Estimate in three of the trailing four quarters and has a positive average surprise of 9.94%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Nabors has a large, high-quality fleet of drilling and workover rigs that operate in key shale plays. This makes the company better-suited to handle the current weakness.
However, the October-December quarter was not the best time for drilling firms, even for the likes of big firms like Nabors. With tumbling crude prices several upstream companies have cut their capital plans, resulting in less work for drilling firms. An oversupplied rig market further adds to the woes. The industry-wide weakness is expected to affect the company’s upcoming earnings as well.
A slowdown in U.S. and international land drilling activity is likely to result in an increase in idle rigs. Moreover, new contracts come with lower dayrates. A large number of brokerage firms lowering fourth-quarter as well as full-year estimates, over the past two months, suggest further bearishness ahead.
Earnings Whispers
Our proven model does not conclusively show that Nabors is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP 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 -12.82%. This is because the Most Accurate estimate stands at 34 cents per share, while the Zacks Consensus is higher at 39 cents.
Zacks Rank: Nabors carries a Zacks Rank #3 (Hold).
Note that the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
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.
Global Partners LP (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. The partnership is likely to release earnings on Mar 2.
Ferrellgas Partners LP (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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