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RPC (RES) to Post Q3 Earnings: Disappointment in the Cards?

Zacks Equity Research

RPC, Inc. RES is set to release third-quarter 2019 results before the opening bell on Oct 23, 2019.

In the last reported quarter, the company’s earnings of 3 cents per share missed the Zacks Consensus Estimate by a penny due to lower contributions from pressure pumping — its biggest service line.

As far as earnings surprises are concerned, the Atlanta, GA-based company failed to beat the Zacks Consensus Estimate for earnings in each of the last four reported quarters, recording a negative earnings surprise of 45.60%.

RPC, Inc. Price and EPS Surprise

RPC, Inc. Price and EPS Surprise

RPC, Inc. price-eps-surprise | RPC, Inc. Quote

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

Which Way are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate of a loss of 1 cent per share for the third quarter has declined from earnings of 1 cent over the past 30 days. This indicates a decline of almost 105.3% from the year-ago quarter.

Further, the Zacks Consensus Estimate for revenues of $342.7 million suggests a 22.1% drop from the prior-year quarter.

Factors to Consider

In the recently completed third quarter, intensified competition in the domestic market left limited room for oilfield services companies to charge premium prices for the services offered. Moreover, slowdown of demand for pressure pumping services in shale plays is expected to be reflected in the to-be-reported quarter’s results. The Zacks Consensus Estimate for revenues from the Technical Services segment is pegged at $313 million, indicating a decline from $421 million in the year-ago period. Moreover, the Zacks Consensus Estimate for operating profit from the segment is pegged at $0.2 million, suggesting a fall from $56 million in the year-ago quarter.

However, the Zacks Consensus Estimate for the Support Services segment’s revenues is pegged at $20 million, implying an improvement from $18.7 million in the year-ago period. Moreover, the Zacks Consensus Estimate for the segment’s operating profit is pegged at $2.6 million, pointing to growth from $1.8 million in the year-ago quarter. The segment includes the company’s services and equipment, which are expected to have performed well, off the site of oil and gas wells.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for RPC in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. RPC’s Earnings ESP is pegged at -50.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: RPC has a Zacks Rank #4 (Sell).

Energy Stocks With Favorable Combination

While earnings beat looks uncertain for RPC, here are some companies from the energy space that you may want to consider on the basis of our model, which shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Noble Corporation plc NE is set to report third-quarter 2019 earnings on Oct 30. The stock has an Earnings ESP of +1.92% and is a Zacks #2 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Phillips 66 PSX has an Earnings ESP of +6.64% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Oct 25.

Plains All American Pipeline, L.P. PAA has an Earnings ESP of +17.20% and is a #3 Ranked player. The company is scheduled to release third-quarter 2019 earnings on Nov 5.

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