Emerge Energy Services (EMES) Q2 Earnings: What’s Up?

Fracking sand player and fuel processor Emerge Energy Services LP EMES is set to release second-quarter 2015 results on Thursday, Aug 6.

Emerge Energy Services reported mixed earnings numbers in the trailing four quarters – two beats and two misses – with an average negative surprise of 5.08%. The company failed to meet estimates in the last reported quarter as well. Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

Frac sand and service firms like Emerge Energy Services continue to face challenging market conditions. The partnership’s ‘Sand Segment’ is likely to be affected by low demand and pricing owing to weak crude prices.

Emerge Energy Services plans to cut back on capital spending to tackle the current pricing weakness by deferring some projects to the next year and terminating others. This would further take a toll on its growth.

Also, the partnership recently reduced distribution payout by 33%. The decrease in distribution is an indication of the building pressure on financials. Additionally, the second quarter and full-year earnings estimates have moved lower for the firm, thereby suggesting further bearishness ahead.

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. Emerge Energy Services has an Earnings ESP of -20.83% as the Most Accurate estimate stands at 19 cents, while the Zacks Consensus Estimate is pegged higher at 24 cents.

Zacks Rank: Emerge Energy Services has a Zacks Rank #5 (Strong Sell).

We caution investors against the stocks with a Zacks Rank #4 or #5 (Sell rated) especially when the company is seeing negative estimate revisions.

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.

Seadrill Partners LLC SDLP with an Earnings ESP of +12.28% and a Zacks Rank #1 (Strong Buy). The company is slated to release earnings on Aug 26.

Calumet Specialty Products Partners LP CLMT with an Earnings ESP of +15.79% and a Zacks Rank #2 (Buy). The company is expected to release earnings on Aug 5.

EV Energy Partners LP EVEP with an Earnings ESP of +4.17% and a Zacks Rank #2. The company is expected to release earnings on Aug 10.

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