Emerge Energy Services (EMES) Q1 Earnings: A Beat in Store?

Emerge Energy Services LP EMES is set to release first-quarter 2018 results before the opening bell on May 1.

In the preceding three-month period, the partnership reported a negative earnings surprise of 41.94% amid increased operating expenses. Coming to its earnings surprise history, Emerge Energy Services has missed estimates in three out of the trailing four quarters.

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Treading?

Let’s take a look at the estimate revisions to get a clear picture of analysts’ opinion on the stock before the earnings release.

The current Zacks Consensus Estimate for the quarter under review is a profit of 6 cents on revenues of $104 million.

The Zacks Consensus Estimate of 6 cents for the first quarter has remained stable since the past 30 days. The estimate of a profit of 6 cents reflects a huge turnaround from the year-ago reported loss of 38 cents.

On a further encouraging note, expected revenues of $104 million are also higher than the prior-year quarter’s figure of $75 million.

Let’s delve deeper to find out what’s going in favor of the stock.

Factors at Play

With U.S. rig count falling to record levels in 2016, oilfield services players were hit hard. Unprecedented declines in activity levels and a sharp fall in upstream spending led to lower revenues and pricing headwinds. However, with commodity prices improving and drilling activities picking up, the market for services companies and frac sand players is on the mend.

Per EIA data, the commodity rose about 7.5% in the first three months of 2018 to finish the quarter at $64.87 per barrel. In fact, the first quarter of the year saw the U.S. oil benchmark attain its highest settlement since December 2014, despite a record high domestic production. Crude was supported by various catalysts including strong demand, and continued production curb from OPEC and its allies. The recovering commodity market calls for higher investments from oil majors and increasing demand for fracking sand that largely depends on drilling activities.

In the last few quarters, the frac sand companies have witnessed a rise in demand as rig counts started rising. In fact, in the last reported quarter, Emerge Energy Services sold 1,331 thousand tons of frac sand, witnessing a huge surge from the year-ago quarter level of 821 thousand tons. With onshore activities improving rapidly in the United States, where the partnership has a strong presence, Emerge Energy Services’ revenues and earnings are likely to get a boost.

Earnings Whispers

Our proven model also shows that Emerge Energy Services is likely to beat estimates in the to-be-reported quarter because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP for this company is +16.67%. This is because the Most Accurate Estimate of 7 cents is pegged higher than the Zacks Consensus Estimate of 6 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Emerge Energy Services carries a Zacks Rank #3 (Hold), which when combined with a positive ESP, makes us confident of an earnings beat.

Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating estimates. Conversely, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

Other Energy Stocks Poised for a Beat

Emerge Energy Services is not the only energy firm looking up this earnings season. Here are some other companies within the same industry, which according to our model also have the right combination of elements to post an earnings beat this quarter:

C&J Energy Services, Inc. CJ has an Earnings ESP of +2.15% with a Zacks Rank #3 and is anticipated to release earnings on May 3.

Solaris Oilfield Infrastructure, Inc. SOI has an Earnings ESP of +6.28% and sports a Zacks Rank #1. It is anticipated to release earnings on May 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

NCS Multistage Holdings, Inc. NCSM has an Earnings ESP of +1.89% with a Zacks Rank #3 and is anticipated to release earnings on May 21.

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