Fracking sand player and fuel processor Emerge Energy Services LP EMES is set to release first-quarter 2015 results on Monday, May 4.
Last quarter, the partnership had delivered negative earnings surprise of 12.93%. However, during the last four quarters, Emerge Energy Services’ average earnings surprise came at a positive 7.37%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Following the weak crude and natural gas pricing scenario during the entire first quarter, Emerge Energy’s earnings from its “Sand Segment” might get hampered. This is because this unit represents the partnership’s business of extracting oil and gas from various grades of industrial sand.
To support this fact, we should note that West Texas Intermediate (WTI) crude traded in the range of $45–$55 per barrel for the most of the January–March period, down from the $100-a-barrel mark back last June. Moreover, natural gas traded significantly below the North American marginal cost of production.
All these events are reflected in Emerge Energy Services’ recently declared first-quarter 2015 cash distribution of $1 per unit, which is 29% and 12% below the sequential and year-ago quarter figures.
Earnings Whispers?
Our proven model does not conclusively show that Emerge Energy Services 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 is elaborated below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -3.61% for Emerge Energy Services as the Most Accurate estimate stands at 80 cents while the Zacks Consensus Estimate is pegged higher at 83 cents.
Zacks Rank: Emerge Energy Services has a Zacks Rank #3 (Hold). While this increases the predictive power of ESP, a negative ESP lowers the possibility of a positive earnings surprise.
Stocks to Consider
Here are some companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Callon Petroleum Company CPE has an Earnings ESP of +50.00% and a Zacks Rank #2. The company is expected to release earnings on May 6.
TC PipeLines LP TCP has an Earnings ESP of +10.67% and a Zacks Rank #2. The company is expected to release earnings on May 7.
Western Refining Inc. WNR has an Earnings ESP of +6.86% and a Zacks Rank #2 (Buy). The company is slated to release earnings on May 5.
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