Factors Influencing TechnipFMC's (FTI) Fate in Q1 Earnings

TechnipFMC plc FTI is set to release first-quarter 2020 results on Wednesday Apr 22, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter is a profit of 24 cents per share on revenues of $3.48 billion.

Let’s delve into the factors that might have influenced the company’s performance in the March quarter.

Factors to Consider for Q1

TechnipFMC’s ‘Subsea’ and ‘Onshore/Offshore’ segments, which collectively represent nearly 90% of the company’s revenues, are likely to have performed well in the first quarter.

Courtesy of digital monitoring services, well intervention and asset refurbishment works, TechnipFMC is likely to have experienced continued strength in Subsea revenues. Evidently, the Zacks Consensus Estimate for sales from this segment is pegged at $1.33 billion, indicating a rise from $1.2 billion reported in the corresponding period of 2019.

In the meantime, the Onshore/Offshore unit is expected to have gained traction from a strong portfolio execution. As a proof of this, the consensus mark for first-quarter segmental revenues stands at $1.69 billion, suggesting an increase from $1.33 billion reported in the year-ago quarter.

However, on somewhat bearish note, weakness in North American activity due to the coronavirus pandemic inducing a crude price slouch is expected to have affected the Surface segment’s top line. The Zacks Consensus Estimate for the segment implies a 7.4% decrease to $364 million from prior-year reported figure. Meanwhile, adverse impacts are expected to be most pronounced during the second quarter of 2020 when most containment measures and wide-scale reductions in business operations are assumed to be in place.

What Does Our Model Say?

Our proven model does not conclusively predict an earnings beat for TechnipFMC this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: TechnipFMC has an Earnings ESP of -9.15%.

Zacks Rank: TechnipFMC has a Zacks Rank #3.

Highlights of Q4 Earnings & Surprise History

In the last reported quarter, this London-based company reported adjusted EPS of 3 cents, falling well short of the Zacks Consensus Estimate of 43 cents. The underperformance can be primarily attributed to lower-than-anticipated profits from the Onshore/Offshore segment, the major contributor to the company’s top and the bottom line. Precisely, adjusted EBITDA from the unit totaled $259.7 million, lagging the Zacks Consensus Estimate of $296 million.

However, the bottom line reversed the year-earlier quarter's adjusted loss of 9 cents on strong contribution from the Surface Technologies segment, adjusted EBITDA of which was $55.9 million, beating the Zacks Consensus Estimate of $42 million. Meanwhile, for the quarter ended Dec 31, the company’s revenues of $3.7 billion missed the Zacks Consensus Estimate by 3.8% but increased 12.2% from $3.3 billion a year ago.

As far as earnings surprises are concerned, this manufacturer and supplier of products, services and fully-integrated technology solutions for the energy industry is on a slippery slope, having underperformed the Zacks Consensus Estimate in three of the last four quarterly reports while beating the same in the remaining quarter, the average negative surprise being 59.3%. This is depicted in the graph below:

TechnipFMC plc Price and EPS Surprise

TechnipFMC plc Price and EPS Surprise

TechnipFMC plc price-eps-surprise | TechnipFMC plc Quote

Stocks to Consider

While earnings beat looks uncertain for TechnipFMC, here are some firms worth considering from the energy space on the basis of our model, which shows that these have the right combination of elements to beat on earnings this reporting cycle:

Transocean Ltd. RIG has an Earnings ESP of +7.81% and a Zacks Rank of 3. The company is scheduled to release earnings on Apr 29.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Southwestern Energy Company SWN has an Earnings ESP of +19.66% and a Zacks Rank #2. The firm is scheduled to release earnings on Apr 30.

Laredo Petroleum, Inc. LPI has an Earnings ESP of +3.16% and is Zacks #3 Ranked. The firm is scheduled to release earnings on May 6.

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