Advertisement
Singapore markets closed

  • Straits Times Index

    3,287.75
    -5.38 (-0.16%)
     

  • S&P 500

    5,071.63
    +1.08 (+0.02%)
     

  • Dow

    38,460.92
    -42.77 (-0.11%)
     

  • Nasdaq

    15,712.75
    +16.11 (+0.10%)
     

  • Bitcoin USD

    63,970.71
    -2,678.43 (-4.02%)
     

  • CMC Crypto 200

    1,361.31
    -21.27 (-1.54%)
     

  • FTSE 100

    8,103.42
    +63.04 (+0.78%)
     

  • Gold

    2,338.40
    0.00 (0.00%)
     

  • Crude Oil

    83.24
    +0.43 (+0.52%)
     

  • 10-Yr Bond

    4.6520
    +0.0540 (+1.17%)
     

  • Nikkei

    37,628.48
    -831.60 (-2.16%)
     

  • Hang Seng

    17,284.54
    +83.27 (+0.48%)
     

  • FTSE Bursa Malaysia

    1,569.25
    -2.23 (-0.14%)
     

  • Jakarta Composite Index

    7,155.29
    -19.24 (-0.27%)
     

  • PSE Index

    6,574.88
    +2.13 (+0.03%)
     

Why RPC (RES) Stock is Down 7.5% Despite Q1 Earnings Beat

Zacks Equity Research
·4-min read

Despite coming up with better-than-expected first-quarter results, RPC, Inc. RES has seen a 7.5% decline in share price since May 6. Demand destruction caused by coronavirus-induced lockdowns and travel bans has kept crude prices in the bearish territory, thereby hurting upstream companies. This has reduced demand for oilfield services provided by RPC. The market outlook seems bearish at the moment.

Better-Than-Expected Q1 Results

RPC reported first-quarter 2020 loss of 4 cents, narrower than the Zacks Consensus Estimate of a loss of 6 cents on successful cost-containment efforts. However, the company reported break-even earnings in the year-ago quarter. The weakness can be primarily attributed to lower activity levels and pricing, along with a smaller fleet of pressure pumping equipment.

Total revenues of $243.8 million beat the Zacks Consensus Estimate of $229 million. However, the top line declined from the year-ago figure of $334.7 million.

ADVERTISEMENT

RPC Inc Price, Consensus and EPS Surprise

RPC Inc Price, Consensus and EPS Surprise
RPC Inc Price, Consensus and EPS Surprise

RPC Inc price-consensus-eps-surprise-chart | RPC Inc Quote

Segmental Performance

Operating loss in the Technical Services segment totaled $12.2 million compared with the year-ago loss of $4.5 million. The underperformance was mainly caused by lower pricing and activity levels. A smaller fleet of equipment within pressure pumping also affected the segment.

Operating profit in the Support Services segment came in at $1.5 million, down from $3.1 million in the year-ago quarter.

Total operating loss in the quarter increased to $218.7 million from the year-ago level of $2.2 million. Average domestic rig count was 785 in the first quarter, indicating 24.7% fall from the year-ago level.

Cost and Expenses

Cost of revenues contracted from $252.4 million in first-quarter 2019 to $181.9 million due to lower materials and supplies expenses, as well as employment costs stemming from reduced activity levels. Moreover, selling, general and administrative expenses fell to $36.5 million in the quarter from the year-ago figure of $45.4 million due to a decline in employment expenses. However, the company incurred impairment and other charges of $205.5 million.

Financials

RPC’s total capital expenditure in the March quarter of 2020 amounted to $25 million. As of Mar 31, the company had cash and cash equivalents of $82.6 million, higher than the fourth-quarter level of $50 million, and no long-term debt.

Outlook

Slowdown in U.S. drilling activities and persistent weakness in crude prices have hurt demand for oilfield services. Although the company witnessed a slight improvement in the first quarter and ended the period on a strong note, it is uncertain of how things will turn out in the near term. It now expects 2020 capital expenditures to be $50 million, lower than the previous guidance of $80 million.

Zacks Rank & Other Stocks to Consider

Currently, RPC has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include EnLink Midstream LLC ENLC, CNX Resources Corporation CNX and Comstock Resources, Inc. CRK, each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

EnLink Midstream’s 2020 earnings per share are expected to rise 97.9% year over year.

CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.

Comstock Resources’ 2020 sales are expected to gain 32.7% year over year.

Zacks’ Single Best Pick to Double

From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.

This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.

Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.

Click Here, See It Free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Comstock Resources, Inc. (CRK) : Free Stock Analysis Report
 
CNX Resources Corporation. (CNX) : Free Stock Analysis Report
 
RPC, Inc. (RES) : Free Stock Analysis Report
 
EnLink Midstream, LLC (ENLC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research