What's in Store for Core Laboratories (CLB) in Q3 Earnings?

Core Laboratories N.V. CLB is scheduled to release third-quarter 2020 results on Wednesday, Oct 21, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 15 cents and the same for revenues stands at $108.87 million.

Against this backdrop, let’s analyze the factors that might have impacted the company’s performance in the September-end quarter.

Factors at Play

Core Laboratories’ cost-reduction efforts have been raising investors’ optimism. In June, the company entered the second phase of its cost-cutting measures, wherein the total annualized cost savings have been estimated at $61 million and quarterly savings have been expected to exceed $15 million. These expanded cost-controlling actions are likely to have been completed in the third-quarter end.These cost-saving measures are expected to have driven the company’s third-quarter earnings and cash flows higher.

On the flip side, the continued weakness in Core Laboratories’ Production Enhancement segment is expected to have impacted the company’s performance. The unit, which is associated with the completion of wells, incurred operating loss of $16.3 million in the second quarter due to a sharp fall in U.S. onshore well-completion activity. The trend is likely to have continued in the third quarter as well.

What Does Our Model Say?

Our proven model does not conclusively predict an earnings beat for Core Laboratories this season. The combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The company has an Earnings ESP of -13.79%.

Zacks Rank: Core Laboratories carries a Zacks Rank #3, currently.

Highlights of Q2 Earnings & Surprise Record

In the last reported quarter, Core Laboratories’ adjusted earnings of 14 cents a share surpassed the Zacks Consensus Estimate of 9 cents, attributable to better-than-expected operating income from the Reservoir Description segment. Precisely, adjusted operating income rose 14.8% year over year to $13.5 million and surpassed the Zacks Consensus Estimate of $9.6 million. However, its profit declined from the year-ago quarter’s earnings of 46 cents per share. This downside was caused by a steep ramp-down in U.S. onshore activity during the quarter.

The oilfield service provider delivered adjusted revenues of $115.74 million, marginally beating the Zacks Consensus Estimate of $115 million. But the top line fell from the year-ago quarter’s revenues of $169.04 million.

As far as its earnings surprises are concerned, this Netherlands-based oilfield services company outpaced the Zacks Consensus Estimate in two of the trailing four quarters, missing the same in one quarter and meeting estimates in the remaining quarter, the average surprise being 12.73%. This is depicted in the graph below:

Core Laboratories N.V. Price and EPS Surprise


Core Laboratories N.V. Price and EPS Surprise

Core Laboratories N.V. price-eps-surprise | Core Laboratories N.V. Quote

Stocks to Consider

While earnings outperformance looks uncertain for Core Laboratories, here are some firms worth considering from the energy space on the basis of our model, which shows that these have the perfect combination of ingredients to deliver a beat this reporting cycle:

Parsley Energy, Inc. PE has an Earnings ESP of +65.19% and is a #3 Ranked player, currently. The firm is scheduled to release earnings results on Oct 28.

Oceaneering International, Inc. OII has an Earnings ESP of +33.91% and a Zacks Rank of 3, currently. The company is scheduled to release earnings results on Oct 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

Concho Resources Inc. CXO has an Earnings ESP of +0.39% and is Zacks #3 Ranked, currently. The firm is scheduled to release earnings results on Oct 28.

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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.

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