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Patterson-UTI Energy (PTEN): What to Expect in Q4 Earnings?

Independent oil refiner and marketer Patterson-UTI Energy, Inc.PTEN is expected to release its fourth-quarter 2016 results before the opening bell on Thursday, Feb 9.

In the preceding three-month period, Patterson-UTI delivered a positive earnings surprise of 1.69%.

Coming to earnings surprise history, the company has a good record. The company beat estimates in all the last four quarters with an average positive surprise of 9.35%.

Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

Patterson-UTI Energy is one of the largest North American land drilling contractors with a large, high-quality fleet of drilling rigs. The company's technologically advanced 'Apex' rigs are the key to its success. Patterson-UTI's proprietary design makes the rigs move faster than conventional ones, drill quicker and more efficiently than regular rigs, and ensures a safer operating environment. As such, these rigs are better suited for the new demands of the exploration business and, therefore, command higher dayrates and utilization than rigs from other land drillers.This should have a positive impact on the upcoming earnings.

We believe that Patterson-UTI's recent agreement to acquire smaller rival Seventy Seven Energy will bolster its scale and customer base as well as enhance its geographic footprint to the most active basins in the U.S.

Patterson-UTI Energy, Inc. Price and EPS Surprise

Patterson-UTI Energy, Inc. Price and EPS Surprise | Patterson-UTI Energy, Inc. Quote

Moreover, the significant advancement of crude oil from their 12-year lows in last February has encouraged producers to increase spending on drilling activities. This, in turn, is likely to spur rig count, resulting in improved demand for oilfield equipment. Factors like these should drive Patterson-UTI's revenues, earnings and cash flows.

However, as is the case with other oil services and equipment suppliers, results for Patterson-UTI are directly exposed to commodity prices, which are inherently volatile and subject to complex market forces. As a result, the ongoing weakness in oil and natural gas prices have curtailed drilling and dampened equipment demand, adversely affecting bookings at Patterson-UTI.

Earnings Whispers

Our proven model does not conclusively show that Patterson-UTI will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 53 cents.

Zacks Rank: Patterson-UTI has a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company's 0.00% Earnings ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

While earnings beat looks uncertain for Patterson-UTI, here are some firms from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

W&T Offshore, Inc. WTI is expected to release fourth-quarter earnings results on Mar 14. The company has an Earnings ESP of +73.91% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Sprague Resources LP SRLP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings on Mar 9.

Pioneer Natural Resources Company PXD has an Earnings ESP of +10.00% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings on Feb 7.

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Patterson-UTI Energy, Inc. (PTEN): Free Stock Analysis Report

Pioneer Natural Resources Company (PXD): Free Stock Analysis Report

W&T Offshore, Inc. (WTI): Free Stock Analysis Report

Sprague Resources LP (SRLP): 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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