Oil drilling equipment maker, Cameron International Corporation CAM is set to release third-quarter 2015 financial results before the opening bell on Oct 22.
Last quarter, the company had delivered a positive earnings surprise of 7.8%, which marked its fourth consecutive quarterly beat. In fact, over the last four quarters Cameron delivered a positive average earnings surprise of 12.82%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Cameron is a leading manufacturer of pressure control equipment used in onshore, offshore, and subsea applications for oil and gas drilling, production, and transmission.
However, like most other oilfield services and equipment suppliers, Cameron has seen a decline in its drilling and subsea equipment demand due to weak commodity prices. The company itself expects the ongoing oil price slump to affect its revenues and operating profit through receding orders. The company’s backlog has plunged nearly 20% in the second quarter.
Moreover, the majority of brokerage firms have lowered earnings estimates for both the third quarter as well as the full year, indicating further bearishness ahead. The third-quarter estimate is currently pegged at 81 cents, substantially below the year-ago quarter level of $1.17 per share.
Earnings Whispers
Our proven model does not conclusively show that Cameron 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 elaborated below.
Zacks ESP: Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.24%. The Most Accurate estimate for Cameron stands at 80 cents, while the Zacks Consensus Estimate is pegged at 81 cents.
Zacks Rank: Cameron has a Zacks Rank #5 (Strong Sell).
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Exterran Partners LP EXLP has Earnings ESP of +19.23% and a Zacks Rank #1 (Strong Buy). The company is expected to release earnings on Nov 3.
Matrix Service Company MTRX has Earnings ESP of +12.90% and a Zacks Rank #1. The company is likely to release earnings on Nov 4.
Natural Gas Services Group Inc. NGS has Earnings ESP of +21.05% and a Zacks Rank #1. The company is anticipated to release earnings on Nov 5.
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