Cactus (WHD) Rallies 9% as Q4 Earnings Surpass Estimates
Cactus, Inc. WHD has rallied 9.2% since it reported strong fourth-quarter 2021 results on Feb 28.
Cactus reported fourth-quarter adjusted earnings of 25 cents per share, beating the Zacks Consensus Estimate of 20 cents. The bottom line increased from the year-ago quarter’s 8 cents.
Total quarterly revenues of $130 million beat the Zacks Consensus Estimate of $123 million. The top line improved from the year-ago quarter’s $68 million.
The fourth-quarter results were driven by increased customer drilling activity and the usage of the firm’s rental equipment.
Dividend Increase
This January, Cactus’ board declared a quarterly cash dividend of 11 cents per share. This reflects an increment of 10% from the prior dividend payout. The dividend will be paid out on Mar 17 to shareholders of record as of Feb 28.
Business Segments
From the Product business, Cactus generated revenues of $83.8 million, increasing from $43 million in the December-end quarter of 2020. Gross profit from the business unit was recorded at $29 million, up from the year-ago quarter’s $13.3 million. The segment was supported by increased customer drilling activity.
Cactus’ Rental revenues were recorded at $19.2 million, up from $8.6 million in the year-ago quarter. Gross income from the Rental unit turned around to a profit of $4.7 million from the year-ago loss of $0.8 million. The segment was supported by the surge in the usage of the firm’s rental equipment.
From the Field Service and Other business segment, Cactus generated revenues of $26.9 million, up from $16.5 million in the year-ago quarter. Gross profit from the business unit was $4.9 million, down 1.5% year over year owing to reduced labor utilization. Higher billable hours and ancillary services offset the positives partially.
Expenses
The cost of product revenues was recorded at $54.8 million, which jumped from $29.8 million in the year-ago quarter. Also, the cost of rental revenues was reported at $14.6 million, up from $9.4 million in the December-end quarter of 2020. The cost of field service and other revenues increased to $22 million from $11.5 million a year ago. As such, total expenses jumped to $104.2 million from the year-ago level of $59.7 million.
Capex and Cash Flow
Cactus’ fourth-quarter 2021 cash investment amount was recorded at $3.2 million. For the reported quarter, operating cash flow was $11.7 million.
Balance Sheet
At the fourth quarter-end, Cactus had cash and cash equivalents of $301.7 million. It has no bank debt outstanding as of Dec 31, 2021.
Guidance
Cactus expects the pace of the addition of rigs in oil and gas resources to remain healthy, considering that the pricing environment of commodities is supportive. Being a manufacturer and designer of highly engineered wellhead and pressure control equipment, Cactus expects revenue growth to continue across all of its business lines in the March quarter of this year.
For 2022, Cactus is projecting net capital expenditures in the band of $20 million to $30 million.
Zacks Rank & Stocks to Consider
Cactus carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Exxon Mobil Corporation XOM, ConocoPhillips COP and Chevron Corporation CVX. While ExxonMobil and ConocoPhillips sport a Zacks Rank #1 (Strong Buy), Chevron carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
ExxonMobil is banking on key upstream projects centered around Permian – the most prolific basing in the United States – and offshore Guyana resources.
ExxonMobil reported strong fourth-quarter results, thanks to improved realized oil and natural gas prices as well as higher refining and chemical margins. In the past seven days, ExxonMobil has witnessed upward earnings estimate revisions for 2022.
Considering production and proved reserves, ConocoPhillips is one of the leading upstream energy players. In the past 30 days, ConocoPhillips has witnessed upward earnings estimate revisions in the past 30 days.
ConocoPhillips’ estimate for earnings for 2022 is pegged at $9.74 per share, suggesting a year-over-year increase of 62.1%.
In the Permian basin, Chevron has a strong footprint. The majority of Chevron’s assets in the most prolific basin of the United States have minimal royal payments, thereby securing handsome cashflows in the long run.
In the past 30 days, Chevron has witnessed upward earnings estimate revisions for 2022.
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