Offshore drilling contractor, Noble Corp. (NE) is set to release third-quarter 2014 financial results after the closing bell on Oct 29.
Last quarter, the company had delivered an impressive 35.82% positive earnings surprise. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
The offshore drilling industry faced intense competition with multiple firms chasing a single contract. On top of that there was an oversupply of offshore drilling rigs that lowered the day rate.
Moreover, for most of the third quarter, crude traded significantly below the physiological threshold of $100 per barrel, which provided little intensive for oil exploration and production companies to hire offshore drilling rigs. This amplified the rig oversupply concern.
Earnings Whispers
Our proven model does not conclusively show that Noble 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 represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -3.57% for Noble as the Most Accurate estimate stands at 54 cents while the Zacks Consensus Estimate is pegged higher at 56 cents.
Zacks Rank: Whiting Petroleum has a Zacks Rank #3 (Hold). Although this increases our predictive power, we caution investors against the stock going into the announcement, as a negative Zacks Earnings ESP lowers the possibility of an earnings surprise.
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.
Cobalt International Energy Inc. (CIE), with Earnings ESP of +11.11% and a Zacks Rank #1 (Strong Buy).
Delek Logistics Partners, LP (DKL), with Earnings ESP of +5.56% and a Zacks Rank #1.
Alon USA Energy Inc. (ALJ), with Earnings ESP of +1.75% and a Zacks Rank #2 (Buy).
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