Yahoo Finance Select Energy (WTTR) Q1 Earnings Preview: Here's What to Watch
Select Energy Services, Inc. WTTR is set to release first-quarter results on May 2. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 15 cents per share on revenues of $401.9 million.
Let’s delve into the factors that might have influenced the water and chemical solution provider’s performance in the March quarter. But it’s worth taking a look at Select Energy’s previous-quarter results first.
Highlights of Q4 Earnings & Surprise History
In the last reported quarter, the Houston, TX-based supplier of water management services to oil and gas exploration and production companies missed the consensus mark due to weakness in sales and lower-than-expected gross profits. Select Energy had reported earnings per share of 7 cents, well behind the Zacks Consensus Estimate of 23 cents. Revenues of $381.7 million came in 1.6% below the consensus mark.
WTTR topped the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. The company has a trailing four-quarter earnings surprise of 23.2%, on average. This is depicted in the graph below:
Select Energy Services Price and EPS Surprise
Select Energy Services price-eps-surprise | Select Energy Services Quote
Factors to Consider
Select Energy is expected to have benefited from the positive trends in its key Water Services segment. In particular, the late 2022 acquisition of Breakwater Energy Partners, which has water infrastructure assets in the Permian Basin and the Eagle Ford, is expected to have contributed to the unit’s margin expansion in the first quarter. Consequently, the consensus mark for Water Services’ gross profit (before depreciation and amortization) is pegged at $47.3 million, up significantly from the prior-year quarter’s level of $26.6 million.
On a somewhat bearish note, the increase in Select Energy’s costs might have dented its to-be-reported bottom line. WTTR’s total costs were $340.1 million in the fourth quarter, up 43.4% from the prior-year quarter. The upward cost trajectory is likely to have continued in the first quarter on certain transaction expenses as well as outlays associated with corporate rebranding initiatives. Investors should know that the company intends to change its name to Select Water Solutions shortly.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Select Energy is likely to beat estimates in the first quarter. 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: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is 20%.
Zacks Rank: WTTR currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
While an earnings beat looks uncertain for Select Energy, here are some firms from the energy space that you may want to consider on the basis of our model:
Sunoco LP SUN has an Earnings ESP of +5.66% and a Zacks Rank #1. The firm is scheduled to release earnings on May 2.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for SUN’s 2023 earnings has been revised 1.4% upward over the past 60 days. Valued at around $4.5 billion, Sunoco has gained 8.5% in a year.
Targa Resources TRGP has an Earnings ESP of +3.26% and a Zacks Rank #2. The firm is scheduled to release earnings on May 4.
For 2023, Targa Resources has a projected earnings growth rate of 53.6%. Valued at around $17.1 billion, TRGP has gained 0.7% in a year.
Canadian Natural Resources CNQ has an Earnings ESP of +4.29% and a Zacks Rank #3. The firm is scheduled to release earnings on May 4.
Canadian Natural Resources delivered a four-quarter average earnings surprise of 10.5%. Valued at around $64.9 billion, CNQ has lost 2.3% in a year.
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Sunoco LP (SUN) : Free Stock Analysis Report
Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
Targa Resources, Inc. (TRGP) : Free Stock Analysis Report
Select Energy Services (WTTR) : Free Stock Analysis Report
