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Core Laboratories (CLB) Up 2.6% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Core Laboratories (CLB). Shares have added about 2.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Core Laboratories due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Core Labs' Q1 Earnings & Sales Beat Estimates

Core Laboratories reported first-quarter 2022 results, wherein adjusted earnings of 8 cents a share beat the Zacks Consensus Estimate of 6 cents. This is attributable to a year-over-year increase in revenues by 6%. However, the bottom line worsened from the year-ago quarter’s earnings of 15 cents per share. This downside is attributable to the year-over-year increase in expenses.

This oilfield service provider’s adjusted revenues of $115.3 million beat the Zacks Consensus Estimate of $112 million by about 2.9%. The top line also rose from the year-ago quarter’s revenues of $108.4 million.

Segmental Performance

Reservoir Description: Revenues decreased by about 2.3% to $74.8 million from $76.5 million in the first quarter of 2021 but narrowly beat the Zacks Consensus Estimate of $74 million. Moreover, the operating income fell from $10 million in the year-ago period to $361,000 and also missed the Zacks Consensus Estimate of $4.2 million due to the heavy impact of the Russia-Ukraine conflict, a greater-than-expected COVID-19 caseload and a typical seasonal decline in revenues. The segment’s operating margin of 0.5% was lower than the prior-year quarter’s 13.1%.

Production Enhancement:  Revenues of $40.5 million compared favorably with $31.9 million in the first quarter a year earlier, which is a 27.1% increase year over year. The same lagged the Zacks Consensus Estimate of $43.47 million.

Moreover, the segmental operating loss of $918,000 in the quarter underperformed the Zacks Consensus Estimate of an operating profit $5.55 million. The year-ago period reported an operating income of $1.6 million. The weak numbers could be attributed to a decrease in international product sales, including the suspension of product sales in Ukraine.

Financials and Dividend

As of Mar 31, 2022, Core Labs had cash and cash equivalents worth $22 million and long-term debt of $188.6 million. The company’s debt-to-capitalization was 53.3%.

In the reported quarter, CLB generated $5.3 million of operating cash and its capital expenditure totaled $2.3 million. This, in turn, led to $3 million of free cash flow.

Core Labs’ board of directors approved a regular quarterly dividend of a cent per share on the company's common stock, payable on May 31, 2022 to all shareholders of record as of May 9, 2022.

2022 Outlook

For the second quarter of 2022, Core Labs’ revenues are anticipated in the $119-$125 million range, while the operating income is estimated in the $9.4-$11.8 million band.

Earnings per share for the second quarter of 2022 are expected between 12 cents and 16 cents.

As Core Labs’ prospects are directly associated with expanding its client activity and tapping new geographies, it continues to focus on the ongoing development of the new client-driven technologies and geographical exploration along with a deepened concentration on digitization and automation throughout its business.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -12.77% due to these changes.

VGM Scores

At this time, Core Laboratories has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Core Laboratories has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Core Laboratories is part of the Zacks Oil and Gas - Field Services industry. Over the past month, Baker Hughes (BKR), a stock from the same industry, has gained 16.1%. The company reported its results for the quarter ended March 2022 more than a month ago.

Baker Hughes reported revenues of $4.84 billion in the last reported quarter, representing a year-over-year change of +1.1%. EPS of $0.15 for the same period compares with $0.12 a year ago.

For the current quarter, Baker Hughes is expected to post earnings of $0.23 per share, indicating a change of +130% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Baker Hughes. Also, the stock has a VGM Score of B.


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