Noble Corporation plc NE is expected to report fourth-quarter 2015 earnings on Feb 3, 2016, after the market closes.
The company has a mixed earnings history. Noble beat the Zacks Consensus Estimate in three of the trailing four quarters but missed the same in one. In the last reported quarter, the company delivered a positive earnings surprise of 33.33%.
Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that Noble is likely to beat earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +3.28%. This is because the Most Accurate estimate stands at 63 cents, whereas the Zacks Consensus Estimate is pegged lower at 61 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Noble carries a Zacks Rank #2 (Buy).The stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings. The Sell-rated stocks (Zacks Ranks #4 and 5) should never be considered going into an earnings announcement.
The combination of Noble’s Zacks Rank #2 and +3.28% ESP makes us confident of an earnings beat this season.
What is Driving the Better-than-Expected Earnings?
Noble is a leading offshore drilling firm with a robust portfolio of assets. Though the industry has witnessed a setback over the past several months, the company is likely to have been less affected by the situation than its peers due to its strong backlog position ($8.1 billion).
As of Sep 30, 2015, the company had 78% of its available rig operating days committed for the year. This included 80% of floating rig days and 74% of jackup rig days. For 2016, an estimated 67% of available rig operating days have been committed. This consists of 58% floating rig days and 76% jackup rig days.These secured commitments act as a cushion for the company in the volatile pricing market and should have a favorable impact on the fourth-quarter earnings.
Additionally, Noble has made continuous endeavors to upgrade its fleet through acquisitions and newbuild projects. The company has also shown strong operational execution and cost-management efforts, which should reflect positively on the upcoming earnings.
Stocks to Consider
Here are some other companies to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter.
Scana Corporation SCG has an Earnings ESP of +2.50% and a Zacks Rank #2.
Enbridge Energy Partners, L.P. EEP has an Earnings ESP of +10.53% and a Zacks Rank #3
Dr. Pepper Snapple Group, Inc. DPS has an Earnings ESP of +2.06% and a Zacks Rank #3.
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