Land drilling contractor
Nabors Industries Ltd.
) is set to release its second-quarter 2013 results after the
closing bell on Jul 23, 2013.
In the last quarter, the company delivered a 13.79% positive
earnings surprise on the back of better results by the Production
Services segment and seasonal peak in Canadian operations. Let's
see how things are shaping up for this announcement.
Factors to Be Considered This Quarter
Nabors anticipates that its operating results for the second
quarter of 2013 will fail to meet expectations. According to
Nabors, unsatisfactory performance from its 'Rig Services' and
'Completion and Production Services' units will lead to this
Decline in sales of capital tools along with decreased rig
services and rental activities impair Nabors' Rig Services
segment. On the other hand, the Completion and Production
Services unit was affected by a tough competitive environment and
severe weather conditions.
Moreover, Nabors' relatively weak balance sheet in this severe
credit-constrained environment (debt-to-capitalization ratio of
more than 42%) is also a cause for concern. Over the last few
years, the company kept adding debt to its balance sheet for a
fleet recapitalization program.
Our proven model does not conclusively show that Nabors is
likely to beat the Zacks Consensus Estimate this quarter. That is
because a stock needs to have both a positive Expected Surprise
Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1 (Strong Buy), or #2 (Buy) or #3 (Hold) for
this to happen. Unfortunately, this is not the case here as
Negative Zacks ESP:
This is because the Most Accurate Estimate is 8 cents while the
Zacks Consensus Estimate stands at 9 cents. This leads to an ESP
of -11.11% for Nabors.
Zacks Rank #3 (Hold):
Nabors' Zacks Rank #3 reduces the predictive power of ESP.
We caution investors against the stock going into the earnings
announcement, as a Zacks Earnings ESP of -11.11% combined with a
Zacks Rank #3 lowers the possibility of an earnings surprise.
Stocks to Consider
Here are some companies to consider as our model shows they
have the right combination of elements to post an earnings beat
W&T Offshore Inc.
) has an Earnings ESP of +9.09% and a Zacks Rank #1 (Strong
Memorial Production Partners LP
) has an Earnings ESP of +19.51% and carries a Zacks Rank #1
Bonanza Creek Energy Inc.
) has an Earnings ESP of +4.65% and carries a Zacks Rank #2
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W&T OFFSHORE (WTI): Free Stock Analysis
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