Is a Beat in Store for Baker Hughes (BKR) in Q3 Earnings?

Baker Hughes Company BKR is set to report third-quarter 2020 results on Oct 21, before the opening bell.

In the last-reported quarter, the company’s loss per share of 5 cents was wider than the Zacks Consensus Estimate of a loss of a cent owing to weak performance by the Oilfield Services, Oilfield Equipment and Digital Solutions segments. Moreover, the company, providing services and products to oil and natural gas producers, missed the consensus estimate in three of the prior four reported quarters, the average negative earnings surprise being 100.8%.

Let’s see how things have shaped up prior to the upcoming earnings announcement.

Baker Hughes Company Price and EPS Surprise

Baker Hughes Company Price and EPS Surprise

Baker Hughes Company price-eps-surprise | Baker Hughes Company Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter earnings per share of 4 cents hasn’t seen any revision in the past 30 days. The figure indicates a decrease of almost 81% from the year-ago quarter.

Further, the Zacks Consensus Estimate for revenues of $4.8 billion suggests an 18.6% decline from the prior-year quarter.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Baker Hughes this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Baker Hughes has an Earnings ESP of +16.67%. This is because the Most Accurate Estimate for the quarter’s earnings is 5 cents per share while the Zacks Consensus Estimate is 4 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Baker Hughes currently carries a Zacks Rank #3.

Factors Driving the Better-Than-Expected Earnings

As compared to the June quarter of 2020, prices of both West Texas Intermediate (WTI) and Brent crude oil have improved in the September quarter, thanks to easing of social-distancing measures. An improving commodity crude pricing scenario is likely to have provided more incentive to explorers and producers for ramping up operations in the September quarter.

Notably, in U.S. resources, the total monthly count of rigs increased to 257 in September from August’s 250, per data provided by Baker Hughes. Thus, addition of rigs in the domestic plays owing to higher crude prices is likely to have benefited the world’s leading equipment and services companies. This is because oilfield service players primarily assist explorers and producers to efficiently set up oil and gas wells.

Other Stocks That Warrant a Look

Here are some other firms that you may want to consider as these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Cabot Oil & Gas Corporation COG has an Earnings ESP of +10.38% and is a Zacks #2 Ranked player. The company is scheduled to release third-quarter results on Oct 29. You can see the complete list of today’s Zacks #1 Rank stocks here

EOG Resources, Inc. EOG has an Earnings ESP of +200.99% and a Zacks Rank of 2. It is scheduled to report third-quarter results on Nov 5.

Oceaneering International, Inc. OII has an Earnings ESP of +54.55% and a Zacks Rank #2. The firm is scheduled to release third-quarter earnings on Oct 28.

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Cabot Oil Gas Corporation (COG): Free Stock Analysis Report
EOG Resources, Inc. (EOG): Free Stock Analysis Report
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Baker Hughes Company (BKR): Free Stock Analysis Report
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