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Emerge Energy Services (EMES): What Will Q2 Earnings Unveil?

Nilanjan Choudhury

Fracking sand player Emerge Energy Services L.P. EMES is set to release its second-quarter 2017 results before the opening bell on Thursday, Aug 3.

In the preceding three-month period, the partnership recorded a negative earnings surprise of -11.76% on increased costs.

In terms of earnings surprise history, Emerge Energy Services has a dismal record. It missed estimates in each of the last four quarters.

Emerge Energy Services LP Price and EPS Surprise

Emerge Energy Services LP Price and EPS Surprise | Emerge Energy Services LP Quote

Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

With the frack sand market expected to clock massive growth in 2017, Emerge Energy Services is likely to see a steep rise in total sand volumes sold. Last quarter, the partnership saw its volumes jump 52% sequentially. Accompanied by higher prices, the pure-play frac sand supplier is expected to reap rich rewards.

However, a new mine capacity in the Permian that is slated to use regional sand has undermined the pricing outlook for existing sand suppliers. Moreover, mounting preparation cost and expenses associated with pulling railcars out of storage to quickly ramp up the utilization is also expected to create headwinds.

Earnings Whispers

Our proven model does not conclusively show that Emerge Energy Services will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at a loss of 9 cents.

Zacks Rank: Emerge Energy Services’ Zacks Rank #4 (Sell) further decreases the predictive power of ESP, making us less confident of an earnings surprise call. 

As it is, we caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Unit Performance

Emerge Energy Services has lost 35.0% of its value during the second quarter versus the 16.2% decline of its industry.

Stocks to Consider

While earnings beat looks uncertain for Emerge Energy Services, here are some energy partnerships you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

Summit Midstream Partners L.P. SMLP has an Earnings ESP of +112.50% and a Zacks Rank #2. The partnership is expected to release earnings results on Aug 3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CrossAmerica Partners L.P. CAPL has an Earnings ESP of +12.50% and a Zacks Rank #2. The partnership is anticipated to release earnings on Aug 7.

Calumet Specialty Products Partners L.P. CLMT has an Earnings ESP of +26.09% and a Zacks Rank #3. The partnership is likely to release earnings on Aug 4.

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Summit Midstream Partners, LP (SMLP) : Free Stock Analysis Report
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Emerge Energy Services LP (EMES) : Free Stock Analysis Report
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