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Oil Stocks to Watch for Q4 Earnings on Jan 26: BHI and HP

The Q4 earnings season is in its nascent stage and we are yet to get a clear picture of the overall market conditions as only 63 of the S&P 500 companies have reported quarterly results so far. With 105 S&P 500 companies set to release their earnings this week, we expect a clearer insight into the performance of the various sectors.

The Q4 earnings cycle has started on a strong note for some sectors. Per the Earnings Trends report, the 'Energy' sector remains a drag on aggregate growth. However, things are likely to improve for the beleaguered sector eventually and it is even expected to clock its first positive earnings growth after eight quarters of decline.

For the few sector components on the S&P 500 Index that have reported Q4 results, total earnings have declined 42.8% due to 7.8% lower revenues. Interestingly, while 50% of the companies have been successful in beating earnings estimates, all of these firms have outperformed on the top-line front.

The 63 S&P 500 companies that have released their financial numbers as of Jan 20, 2017 account for 12.6% of the index's total market capitalization. Notably, total earnings for these companies has risen 4.7% from the year-ago period due to a 2.7% increase in revenues. Also, 66.7% of these companies posted an earnings beat, while 50.8% topped revenue expectations. Excluding the impact of the energy sector, the S&P 500 Index would witness earnings growth of 5.8% due to 3.0% increase in revenues.

However, the market conditions can be better assessed after oil & gas drilling industry heavyweights like Hess Corp. HES report their Q4 results this week. Here, we have compiled a list of two players from the broader energy space that are expected to report quarterly numbers on Jan 25.

Stocks to Watch for Earnings on Jan 26

Let's see how these two companies are likely to fare when they come up with Q4 numbers on Thursday, Jan 26.

Baker Hughes Inc.BHI is an oilfield services company that provides wellbore-related products and technology services and systems to the global oil and gas industry. The company is expected to release its quarterly results before the opening bell.

In Q3, this Houston, TX-based provider of specialized technologies posted narrower-than-expected loss. Steep activity reductions and project delays in Gulf of Mexico, West Africa, and Norwegian deepwater resulted in the loss incurred.

We do not expect Baker Hughes to beat expectations in Q4. Though the company's Zacks Rank #3 (Hold) increases the predictive power of ESP, its Earnings ESP of -50.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Baker Hughes Incorporated Price and EPS Surprise

Baker Hughes Incorporated Price and EPS Surprise | Baker Hughes Incorporated Quote

As per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat on earnings.

Simultaneously, we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Headquartered in Tulsa, OK, Helmerich & Payne, Inc.HP is set to report Q4 earnings before the opening bell. The company is engaged in the contract drilling of oil and gas wells in the U.S. and internationally. It provides a broad range of specialized services, including drilling rigs, equipment, personnel, and camps on a contractual basis to explore for and develop oil and gas from onshore areas and from fixed platforms, tension-leg platforms, and spars in offshore areas. Coming to the earnings surprise history, Helmerich & Payne has a mixed track record. It beat estimates in two of the last four quarters at an average rate of positive 41.19%.

An earnings beat seems much more likely for Helmerich & Payne this time around, given its a Zacks Rank #2 and Earnings ESP of +2.78%. You can see the complete list of today's Zacks #1 Rank stocks here .

Helmerich & Payne, Inc. Price and EPS Surprise

Helmerich & Payne, Inc. Price and EPS Surprise | Helmerich & Payne, Inc. Quote

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Baker Hughes Incorporated (BHI): Free Stock Analysis Report

Helmerich & Payne, Inc. (HP): Free Stock Analysis Report

Hess Corporation (HES): 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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