Gulfmark Offshore Inc.
) - which provides offshore oilfield services to the oil and gas
upstream firms − is set to release its second-quarter 2014
financial results after the closing bell on Jul 21.
Last quarter, the company had delivered an impressive 16.7%
positive earnings surprise. Let's see how things are shaping up for
Factors Likely to Influence this Quarter
The prospect of offshore oil and gas field service providers are
closely linked with the prices of crude oil and natural gas. The
favourable pricing environment of the commodities encourages
upstream companies to explore and produce more oil and natural gas,
which in turn creates demand for oilfield services.
During the second quarter, crude oil traded over the $100 per
barrel mark. This most probably gave confidence to the upstream
firms for conducting exploration and production activities and
hence created demand for oilfield services. This brought good news
for Gulfmark Offshore.
However, we don't think the pricing environment for natural gas
was much favourable. After reaching a price as high as $8.15 per
million British thermal unit level during the first quarter -
primarily due to a harsh and prolonged winter - the price of
natural gas was trading below $5.00 during the entire second
quarter. This is expected to hamper the profit margin of Gulfmark
Offshore to quite an extent. Moreover, we are also concerned about
the increasing direct operating cost of the company - which has
been growing at an increasing pace for the last two years.
Our proven model does not conclusively show that Gulfmark
Offshore is likely to beat the Zacks Consensus Estimate this
quarter. This is because a stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. Unfortunately, this
is not the case here as elaborated below.
Earnings ESP represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate. This leads to an ESP of
-5.21% for Gulfmark Offshore as the Most Accurate estimate stands
at 91 cents while the Zacks Consensus Estimate is pegged higher at
Gulfmark Offshore has a Zacks Rank #4 (Sell). We caution investors
against the stock going into the earnings announcement, as a Zacks
Earnings ESP of -5.21% combined with a Zacks Rank #4 deters us from
being confident of an earnings surprise.
Stocks to Consider
Here are some companies to consider as our model shows these
have the right combination of elements to post an earnings beat
Swift Energy Co.
), with Earnings ESP of +150.00% and a Zacks Rank #1 (Strong Buy).
Clayton Williams Energy Inc.
), with Earnings ESP of +4.97% and a Zacks Rank #1.
), with Earnings ESP of +7.69% and a Zacks Rank #2 (Buy).
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