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Baker Hughes (BKR) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Baker Hughes Company BKR is set to report third-quarter 2019 results on Oct 30, before the opening bell.

Let’s see how things have shaped up prior to the announcement.

Which Way are Estimates Headed?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts feel about the company prior to the upcoming earnings release.

The Zacks Consensus Estimate for third-quarter earnings of 24 cents has seen no upward revision but three downward movements in the past 30 days. The figure suggests a year-over-year improvement of 26.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $6.1 billion for the quarter, indicating an improvement of almost 8% from the year-ago reported figure.

Factors to Consider

In the September quarter of 2019, there has been significant year-over-year improvement in drilling operations in oil and natural gas plays in international markets. Per data provided by Baker Hughes, the total count of oil and gas drilling rigs in the months of July, August and September 2019 was 1162, 1138 and 1131, respectively. In the comparable months of 2018, the tallies were recorded at 997, 1008 and 1004, respectively.

Since oilfield service firms assist explorers and drillers in setting up oil and gas wells, the ramp up in international drilling operations is likely to have contributed to the firm’s third-quarter earnings.

However, conservative capital spending by North American drillers is expected to have dented demand for oilfield service contracts in the continent.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Baker Hughes this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is -1.87% as the Most Accurate Estimate of 23 cents per share is pegged lower than the Zacks Consensus Estimate of 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Baker Hughes currently carries a Zacks Rank #3.

Highlights of Q2 Results & Earnings History

In the last reported quarter, Baker Hughes came up with earnings of 20 cents per share, which beat the Zacks Consensus Estimate of 19 cents. Moreover, quarterly earnings improved from the year-ago figure of 10 cents.

However, the oilfield service firm delivered an average negative earnings surprise of 0.21% over the past four quarters, as shown in the chart below.

Baker Hughes Price and EPS Surprise

 

Baker Hughes Price and EPS Surprise

Baker Hughes price-eps-surprise | Baker Hughes Quote

Stocks That Warrant a Look

Though an earnings beat looks uncertain for Baker Hughes, here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Continental Resources Inc CLR has an Earnings ESP of +4.60% and is Zacks #3 Ranked. The company is scheduled to release earnings on Oct 30. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Gulfport Energy Corporation GPOR has an Earnings ESP of +3.57% and a Zacks Rank #3. The company is set to release earnings on Oct 31.

Concho Resources, Inc. CXO has an Earnings ESP of +1.91% and is Zacks #3 Ranked. The company is scheduled to release earnings on Oct 29.

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Baker Hughes, a GE company (BKR) : Free Stock Analysis Report
 
Continental Resources, Inc. (CLR) : Free Stock Analysis Report
 
Concho Resources Inc. (CXO) : Free Stock Analysis Report
 
Gulfport Energy Corporation (GPOR) : Free Stock Analysis Report
 
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