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Emerge Energy Services (EMES) Q4 Earnings: What's in Store?

Zacks Equity Research
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Fracking sand player Emerge Energy Services L.P. EMES is set to release fourth-quarter 2017 results before the opening bell on Feb 26, 2018.

In the preceding three-month period, the partnership recorded a positive earnings surprise of 400%. On top of that, Emerge Energy posted an average positive earnings surprise of 89.4% for 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

The frac sand demand depends largely on drilling activities. As a result, crude oil production and its prices steer the demand scenario for frac sand. In the last few quarters, the frac-sand companies have witnessed a rise in demand as the rig counts started rising since mid-2016. The onshore activities in the country have increased especially in Texas, where the company has a strong presence. The company is thus expected to largely benefit from the situation.

However, the company’s high leverage is expected to negatively impact the company. It will affect the company’s ability to take any positive expansion initiatives and can hinder its potential to invest in business. Moreover, mounting preparation cost and expenses associated with pulling railcars out of storage to quickly ramp up the utilization is also expected to play spoilsport.

 

 

Earnings Whispers

Our proven model does not conclusively show that Emerge Energy Services is likely to 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) for this to happen. But this is not the case here as you will see below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: Emerge Energy Services’ Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Unit Performance: Emerge Energy Services has lost 43.1% of its value during the fourth quarter compared with 25.7% decline of its industry.

 

Stocks to Consider

Here are some companies worth considering from the same space as our model shows that these have the right combination of elements to beat on earnings this quarter.

Houston, TX-based EOG Resources EOG is an upstream company. It has an Earnings ESP of +3.61% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here. It is expected to report fourth-quarter results on Feb 28, 2018.

WildHorse Resource Development Corporation WRD, based in Houston, TX, is an independent oil and natural gas exploration and production company. It has an Earnings ESP of +5.26% and a Zacks Rank #1. It is anticipated to report fourth-quarter results on Mar 7, 2018.

Houston, TX-based Oasis Petroleum Inc. OAS is an independent exploration and production company with an Eearnings ESP of +14.28% and a Zacks Rank #2. It is expected to report fourth-quarter results on Feb 27, 2018.

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Emerge Energy Services LP (EMES) : Free Stock Analysis Report
 
EOG Resources, Inc. (EOG) : Free Stock Analysis Report
 
Oasis Petroleum Inc. (OAS) : Free Stock Analysis Report
 
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