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Is Ensco (ESV) Poised to Beat on Earnings this Season?

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Oil and natural gas driller, Ensco plcESV is expected to report third-quarter 2015 earnings on Wednesday, Oct 28. Let's see how things are shaping up prior to the announcement.

In the last quarter, the company's earnings of $1.18 per share decreased from $1.58 earned in the year-ago quarter. The results also surpassed the Zacks Consensus Estimate of $1.04. Let's see how things are shaping up prior to the announcement.

Why a Likely Positive Surprise?

Our proven model shows that Ensco has the right combination of two key ingredients for an earnings beat.

Zacks ESP:Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.37%. This is because the Most Accurate estimate of 78 cents is pegged higher than the Zacks Consensus Estimate of 75 cents. The positive ESP is a meaningful indicator of a likely earnings beat for the company.

Zacks Rank: Ensco holds a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings.

The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

The U.K.-based Ensco is a leading supplier of offshore contract drilling services to the oil and gas industry. The company caters to a varied range of customers including many of the leading national and international oil companies, in addition to many independent operators.

Ensco is among the most geographically diverse offshore drilling companies, with current operations and drilling contracts spanning approximately 20 countries on 6 continents in nearly every major offshore basin around the world. The markets in which the company operates include the U.S. Gulf of Mexico, Mexico, Brazil, the Mediterranean, the North Sea, the Middle East, West Africa, Australia and Southeast Asia.

Ensco should be well positioned to improve its earnings and revenues in the foreseeable future, as well as benefit from a recovery in oil-directed drilling. Ensco has a contracted revenue backlog (excluding bonus opportunities) of $7.4 billion which provides it with an excellent cash flow visibility.

Overall activities of Ensco during the third quarter were adequate to win analysts' confidence. As a result, the Zacks Consensus Estimate for the third quarter improved to 73 cents from 58 cents per share over the last 90 days.

Other Stocks That Warrant a Look

Here are some other companies in the energy sector with the right combination of elements to post an earnings beat this quarter:

Exterran Partners, L.P. EXLP has Earnings ESP of +19.23% and a Zacks Rank #1. The company is slated to release earnings results on Nov 3.

Callon Petroleum Company CPE has Earnings ESP of +100.00% and a Zacks Rank #2. It will be reporting results on Nov 4.

PennTex Midstream Partners, LP PTXP has Earnings ESP of +114.29% and a Zacks Rank #2. The company is scheduled to release results on Nov 6.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ENSCO PLC (ESV): Free Stock Analysis Report

EXTERRAN PTNRS (EXLP): Free Stock Analysis Report

CALLON PETE-DEL (CPE): Free Stock Analysis Report

PENNTEX MIDSTRM (PTXP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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