U.S. Markets closed

Earnings Preview: Newpark Resources (NR) Q3 Earnings Expected to Decline

Zacks Equity Research

Newpark Resources (NR) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended September 2019. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.

The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on October 30. On the other hand, if they miss, the stock may move lower.

While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.

Zacks Consensus Estimate

This oil and gas industry supplier is expected to post quarterly earnings of $0.07 per share in its upcoming report, which represents a year-over-year change of -12.5%.

Revenues are expected to be $221.27 million, down 6% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 10% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.

Price, Consensus and EPS Surprise

Earnings Whisper

Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Newpark?

For Newpark, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -4.55%.

On the other hand, the stock currently carries a Zacks Rank of #3.

So, this combination makes it difficult to conclusively predict that Newpark will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Newpark would post earnings of $0.06 per share when it actually produced earnings of $0.05, delivering a surprise of -16.67%.

Over the last four quarters, the company has beaten consensus EPS estimates just once.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Newpark doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Newpark Resources, Inc. (NR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research

  • Business

    If Coronavirus Is Killing Fewer People Than the Flu, Why Has Beijing Quarantined Millions?

    China's Leaders on the Hot Seat Market Intelligence Report by TIS Group Feb. 21: Over the past several days, we have detailed some, though not all, of the actions being taken by China's government to control the coronavirus outbreak. I was told today that roughly 50,000 people die in China each year from the flu. If the coronavirus is just another flu-like virus and the current death toll really is about 2,000, not 50,000, why then has Beijing locked down 750 million people?

  • Morgan Stanley is paying $13B for E-Trade, or $2,500 per customer. You can earn a $3,500 sign-up bonus for signing with a new broker — with one major catch

    Morgan Stanley is paying $13B for E-Trade, or $2,500 per customer. You can earn a $3,500 sign-up bonus for signing with a new broker — with one major catch

    If the latest Wall Street mega-deal doesn't make you want to switch online brokerage accounts for a lucrative sign-up bonus, maybe it should. Wall Street giant Morgan Stanley announced an agreement Thursday to pay $13 billion to acquire the online brokerage E-Trade which has 5.2 million customer accounts. “The combination will significantly increase the scale and breadth of Morgan Stanley's Wealth Management franchise, and positions Morgan Stanley to be an industry leader in Wealth Management across all channels and wealth segments,” Morgan Stanley said in a statement.

  • ‘Overprotected’ investors could get stung in the next recession, warns top Barclays strategist

    ‘Overprotected’ investors could get stung in the next recession, warns top Barclays strategist

    Rattled by rising non-China coronavirus cases — notably in South Korea — investors appear unwilling to load up on stocks heading into the weekend. Welcome to the world of helicopter investing and our call of the day from Barclays Wealth Management's chief investment officer William Hobbs, who finds overly anxious investors living in the “long shadow” caused by the financial crisis. “The most common narrative in markets is what to do when the next recession comes along — own Treasurys, own gold, own quality to such an extent that my concern would almost be that if the next recession is of a more normal variety, such as a stock retracement of 10% to 15% and moderate declines in unemployment, you'll find that you have overprotected yourself and the underperformance could actually be in the areas which you thought were giving you safety,” Hobbs told MarketWatch.

  • Microsoft Pulling Back; Buy More Or Sell?
    Investor's Business Daily Video

    Microsoft Pulling Back; Buy More Or Sell?

    As Microsoft stock pulls back, the IBD Live Team discusses whether it's best to take profits here or double down on this IBD Long Term Leader stock.

  • Michael Bloomberg says it’s not so ‘simple’ to produce his tax returns — here’s what most high-income tax returns have in common

    Michael Bloomberg says it’s not so ‘simple’ to produce his tax returns — here’s what most high-income tax returns have in common

    Michael Bloomberg, the billionaire former New York City mayor running for the Democratic presidential nod, says he will release his tax returns — but that's no easy feat. “I can't go to TurboTax,” Bloomberg, the founder and CEO of the global media and financial data company Bloomberg L.P., told Democratic debate moderators on Wednesday night. Bloomberg, who is worth $65.2 billion according to Forbes, said he makes money from all over the globe, so his tax payments are complex.

  • Analysts: 2 Big 8% Dividend Stocks to Buy (And 1 to Sell)

    Analysts: 2 Big 8% Dividend Stocks to Buy (And 1 to Sell)

    The company has been making reliable dividend payments since 2014, and has raised the payment modestly in the past two years. At $1.44 annualized, the yield is a generous 8.54%. Barclays analyst Christine Cho sees PAGP growing going forward, resting as it does on a sound foundation.

  • New Victoria’s Secret Owner, Sycamore Partners, Has a Storied History in Footwear: 4 Things to Know
    Footwear News

    New Victoria’s Secret Owner, Sycamore Partners, Has a Storied History in Footwear: 4 Things to Know

    It's the end of an era for Victoria's Secret, the lingerie giant that for 28 years has been under the wing of mall retail group L Brands. On Thursday, private equity firm Sycamore Partners announced that it would acquire a 55% stake in the company for $525 million. The deal, which takes Victoria's Secret off the public market at a valuation of $1.1 billion, is notable not only for its relatively modest size (L Brands' market capitalization has fallen from $29 billion at its peak in 2015 to around $6.5 billion today) but also for the brand's new owner.

  • Business

    The Dow Closes Down 228 Points. Don’t Just Blame Coronavirus, Blame the U.S. Service Economy.

    The Dow Jones Industrial Average dropped again on Friday—and yields on long-term Treasury debt fell to record lows—but investors can't simply blame the coronavirus outbreak in China this time. A key U.S. economic indicator registered its weakest reading since 2013. The Markit Services PMI, or purchasing manager index, came in under 50—the level that divides growth from contraction.

  • Business

    Stocks Drop on the Week but Still Look Bubbly. Time to Prepare for a Correction.

    The last time we got to these levels, the bubble burst and a 50%-plus global bear market began,” Consider the trading action in the market's most popular stocks. The FAANGs— (FB) (ticker: FB), (AAPL) (AAPL), (AMZN) (AMZN), (NFLX) (NFLX), and Google parent (GOOGL) (GOOGL)—are up 10% year to date, adding more than $330 billion in market value to the S&P 500. What's more, the average price/earnings ratio for FAANG stocks has jumped to 35 times estimated earnings from 21 times last year.

  • Bernie Sanders possibly running against President Trump is starting to scare investors: strategist
    Yahoo Finance

    Bernie Sanders possibly running against President Trump is starting to scare investors: strategist

    There is a growing undercurrent in markets that say a battle this fall between self-described socialist Senator Bernie Sanders and President Donald Trump could be bad news for stock prices. As evidenced by the market's strong run-up in 2020, investors have yet to exit stocks on fears of a big government Bernie winning the Oval Office. But his continued strong showing in debates and national polls may lead to some profit-taking sooner rather than later.

  • Dow drops over 300 points on Fed comments, coronavirus worries
    Fox Business

    Dow drops over 300 points on Fed comments, coronavirus worries

    U.S. equity markets turned sharply lower Thursday midmorning as investors digested fresh comments from the Fed and rising fears over the coronavirus. The selling pushed the S&P 500 and the Nasdaq Composite off record highs and clipped over 300 points off the Dow Jones Industrial Average before giving back some of those losses. Fed Vice Chairman Richard Clarida told CNBC the market was too aggressive in pricing in a Fed rate cut later this year which investors including Keith Fitzgerald of Money Map Press cited as the catalyst for the sudden reversal in the equity markets.

  • Vanguard vs. Fidelity: Which Brokerage is Best?

    Vanguard vs. Fidelity: Which Brokerage is Best?

    If you're looking for a platform for investing, you may consider two of the largest brokerage firms, Vanguard and Fidelity. Vanguard, which has long stressed the value of low-cost investing, tends to focus on long-term investing, such as opening a retirement savings account or a brokerage account that can help investors build funds for a rainy day. On the other hand, Fidelity pursues a broader focus, one that includes retail investors as well as sophisticated traders.

  • Zoom Video Extends Gains
    Investor's Business Daily Video

    Zoom Video Extends Gains

    The fast-growing company operates a video communications platform. Earnings are due March 4 after the close.

  • Are Investors Undervaluing Gilead Sciences, Inc. (NASDAQ:GILD) By 23%?
    Simply Wall St.

    Are Investors Undervaluing Gilead Sciences, Inc. (NASDAQ:GILD) By 23%?

    Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Gilead Sciences, Inc. (NASDAQ:GILD) as an investment opportunity by projecting its future cash flows and then discounting them to today's value. This is done using the Discounted Cash Flow (DCF) model. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method.

  • Mason Hawkins' Southeastern Buys 4 Stocks in 4th Quarter

    Mason Hawkins' Southeastern Buys 4 Stocks in 4th Quarter

    Southeastern Asset Management recently disclosed its portfolio updates for the third quarter of 2019. Founded by Mason Hawkins (Trades, Portfolio) in 1975, the Memphis, Tennessee-based firm manages the Longleaf Partners Funds. GuruFocus has detected 4 Warning Sign with WMB.

  • Warren Buffett’s annual letter: Here’s what investors are looking for

    Warren Buffett’s annual letter: Here’s what investors are looking for

    Berkshire Hathaway Inc. (BRK)(BRK) will release Warren Buffett's eagerly awaited annual shareholder letter, the company's annual report and its latest earnings around 8 a.m. Eastern on its website, where investors can also peruse the chairman and chief executive's past missives. Mark Hulbert: Warren Buffett had a tough year—how might he explain it? Investors of all stripes have dived into the lengthy letters over the years to pick up Buffett's insights on a range of topics beyond Berkshire's performance.

  • Business

    What Is Capital Gains Tax and When Are You Exempt?

    The subtraction of capital losses from capital gains is known as the net capital gain. That means one can offset the other, whether it's a gain offsetting a loss to make sure you still have a profit or a loss offsetting a gain to help pay less of a capital gains tax that year. To put it into numbers, let's say you have $5,000 of shares in one company and $2,000 of shares in another business.

  • Buffett Bets on America Again

    Buffett Bets on America Again

    Investors searching for a guru that has been uber-bullish on the U.S. economy for decades need not look beyond Warren Buffett (Trades, Portfolio). In many televised interviews and his annual letters to shareholders of Berkshire Hathaway, Inc. (NYSE:BRK.A) (NYSE:BRK.B), the guru has emphasized why the largest economy in the world will continue to grow infinitely. GuruFocus has detected 5 Warning Signs with BRK.A. Click here to check it out.

  • 3 Marijuana Stocks Poised to Lead a Sector Rebound

    3 Marijuana Stocks Poised to Lead a Sector Rebound

    As the Canadian cannabis market continues to fail to meet sales projections, the licensed producers (LPs) with the best balance sheets are poised to lead a market rebound. With both Aurora Cannabis and Tilray implementing restructurings, the industry could see a void in certain markets providing opportunities for companies with the ability to fund growth initiatives. Based on the Aurora restructuring, the company is exiting several international markets along with shifting a focus to a value brand.

  • Business

    A Rosy Forecast for Microsoft Shares

    We raise our price target to $212 [from $190], based on the shares trading to 30 times enterprise value/calendar-2021 free cash flow. We believe that the investment narrative for the next five years could be defined by 1) Azure's hybrid cloud portfolio and nonconflicted business model, which will allow Microsoft to sustain a competitive advantage, with its commercial cloud business eclipsing $100 billion in revenue by fiscal 2024. The combination of the Teams and Power Platform [software, which] could help Microsoft reshape the business-productivity landscape and enable it to move beyond a tactical information-technology vendor to a key strategic partner in the “middle office.

  • Business

    A Contrarian Economist Is Warning of Recession and Deflation. He’s Been Right Before.

    Economist David Rosenberg has been warning for years that the U.S. economy isn't as healthy as it might seem. In 2009, he moved to Toronto-based wealth manager Gluskin Sheff & Associates, serving as chief economist and maintaining his bearish outlook for much of one of the longest bull market in history. Barron's caught up with Rosenberg, who recently set off on his own as chief economist and strategist at Rosenberg Research & Associates.

  • Here’s three reasons why the 30-year Treasury yield plunged to a record low

    Here’s three reasons why the 30-year Treasury yield plunged to a record low

    The U.S. 30-year Treasury bond yield dropped to an all-time low on Friday, sparking worries among investors who wonder what it's saying about the economy's future prospects. Analysts say the slump in the long bond's yield this week reflects a confluence of factors including easy Federal Reserve monetary policy, concerns about the COVID-19 epidemic's impact on economic growth, and an absence of inflationary pressures. Historically, a slump in long-term yields can indicate fears that growth will start to disappoint and inflation will fall which may make the real return on bonds more attractive.

  • Trade Alert: The Founder Of Tesla, Inc. (NASDAQ:TSLA), Elon Musk, Has Just Spent US$10.0m Buying Shares
    Simply Wall St.

    Trade Alert: The Founder Of Tesla, Inc. (NASDAQ:TSLA), Elon Musk, Has Just Spent US$10.0m Buying Shares

    Tesla, Inc. (NASDAQ:TSLA) shareholders (or potential shareholders) will be happy to see that the Founder, Elon Musk, recently bought a whopping US$10.0m worth of stock, at a price of US$767. In fact, the recent purchase by Founder Elon Musk was not their only acquisition of Tesla shares this year. In the last twelve months there was more buying than selling by Tesla insiders.

  • Business

    Virgin Galactic Stock Is Skyrocketing. It’s Just Hype.

    Every couple of years, a new stock mania captures the imagination of the investing public. It may be (SPCE) (ticker: SPCE), which could very well be the frothiest stock around right now. Late last year, Virgin Galactic went public through a merger with Social Capital Hedosophia Holdings, a special-purpose acquisition company.

  • The 4 Most-Bought Guru Stocks of the 4th Quarter

    The 4 Most-Bought Guru Stocks of the 4th Quarter

    Hedge funds flock to big-name companies like Amazon CNBC also reported that Goldman Sachs Group Inc. NYSE:GS) said in a note that the typical hedge fund "now carries 69% of the long portfolio in its top-10 holdings, up from 55% in 2005." The note also mentions that investors are "crowding into the biggest stocks" like Amazon and Microsoft.