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Liberty Oilfield Services (LBRT) Down 26.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Liberty Oilfield Services (LBRT). Shares have lost about 26.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Liberty Oilfield Services due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Liberty Oilfield Q3 Loss Wider Than Expected

Liberty Oilfield Services reported third-quarter 2021 loss per share of 22 cents, wider than the Zacks Consensus Estimate of a loss of 12 cents. The underperformance reflects the impact of ongoing logistics challenges, rising costs and acquisition integration expenses on account of the onshore hydraulic fracturing business in the United States and Canada that the company purchased from Schlumberger in January.

However, the bottom line compared favorably with the year-ago quarter’s loss of 41 cents due to strong execution, higher activity and increased service pricing.

Total revenues came in at $653.7 million, above the Zacks Consensus Estimate of $615 million and surged from the year-ago level of $147.5 million.

Meanwhile, the third-quarter adjusted EBITDA was $32 million against the prior-year quarter figure of $1.4 million.

In its earnings release, the company also announced the acquisition of environment-friendly proppant delivery solutions provider PropX for $90 million that include $13.5 million in cash and $76.5 million worth Liberty common stock. The addition of PropX is expected to improve logistics efficiency and add innovation to Liberty’s portfolio.

Balance Sheet & Capital Expenditure

As of Sep 30, Liberty had approximately $34.7 million in cash and cash equivalents. The pressure pumper’s long-term debt of $121.1 million represented a debt-to-capitalization of 9.2%. Further, the company’s liquidity — cash balance, plus revolving credit facility — amounted to $268 million.

In the reported quarter, the company spent $56.2 million on its capital program.

Guidance

Liberty management sees strong commodity prices driving frac service usage — especially by private upstream operators — into the next year. In particular, the company’s environmental-friendly and sophisticated offerings provide it with a comparative advantage. At the same time, Liberty is not immune to macro issues like higher transportation costs, driver scarcity and labor shortages.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. The consensus estimate has shifted -56.57% due to these changes.

VGM Scores

Currently, Liberty Oilfield Services has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Liberty Oilfield Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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