Ensco plc ESV is scheduled to report first-quarter 2018 results on Apr 26, before the opening bell.

Last quarter, the company delivered a positive earnings surprise of 11.5%. Moreover, Ensco delivered an average positive earnings surprise of 40.9% over the last four quarters.

Ensco plc Price and EPS Surprise

Ensco plc Price and EPS Surprise | Ensco plc Quote


Which Way Are Estimates Trending?

Let’s take a look at the estimate revisions to get a clear picture of analyst’s opinion on the stock before the earnings release.

The Zacks Consensus Estimate of a loss of 25 cents for the first quarter widened from a loss of 24 cents over the last 30 days, with one downward revision. The estimated figure reflects a year-over-year decline of about 525%.

Further, analysts polled by Zacks expect revenues of $433.5 million for the first quarter, showing a fall of 8% from the year-ago quarter.

Factors to Consider

In March 2018, the global count of rig exploring for oil and natural gas declined to 2,179 from 2,271 in February 2018, but increased from 1,985 in March 2017, per a report of oilfield services player Baker Hughes, a GE company (BHGE). Higher rig operations on a year-over-year basis, in the prospective resources, indicate increased activities of drillers, which includes Ensco.

The Zacks Consensus Estimate for revenues from the floaters segment is $259 million, down from $303 million in the last quarter. Last quarter, Ensco’s revenues and utilization was unchanged year over year from this segment against a fall in the dayrate over the same period. Moreover, contract drilling expense increased from the year-ago quarter and is likely to be a dampener.

The Zacks Consensus Estimate for revenues from the jack ups segment is $148 million, up from $137 million in the year-ago quarter. The addition of new jack ups to the fleet, from the acquisition of Atwood, is likely to add to the revenues in the coming quarters. However, it is likely to be offset by increased costs.

In 2017, the company generated negative free cash flow of $275 million against $765 million of positive cash flow during 2016. We believe that reduced rig utilizations and significant lower average day rates will continue to hurt Ensco’s future free cash flow.

Q1 Price Performance

During the quarter, the company’s shares lost 25.7% compared with the industry’s 14% decline.


Earnings Whispers

Our proven model does not show that Ensco will beat on earnings this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.  

Zacks ESP: Earnings ESP for the company is -4.86% as the Most Accurate estimate is a loss of 27 cents, while the Zacks Consensus Estimate is pegged at a loss of 25 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Ensco carries a Zacks Rank #3.

Please note that we caution against stocks with Zacks Rank #4 and 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.   

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Based in Houston, Solaris Oilfield Infrastructure, Inc. SOI manufactures as well as provides patented mobile proppant management systems which unload, store and deliver proppant at oil and natural gas well sites. The company has an Earnings ESP of +6.28% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources, Inc CLR is an independent oil and natural gas exploration and production company. The company has an Earnings ESP of +10.56% and carries a Zacks Rank #3.

Houston, TX-based EOG Resources, Inc EOG is a major independent oil and gas exploration and production company. The company has an Earnings ESP of +10.94% and a Zacks Rank #3.

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