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Ensco (ESV) Down 27% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Ensco (ESV). Shares have lost about 27% in that time frame, underperforming the S&P 500.

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

EnscoRowan Tops Q1 Earnings Estimates, Declines Y/Y

EnscoRowan reported adjusted first-quarter 2019 loss of $1.69 a share, narrower than the Zacks Consensus Estimate of a loss of $1.79. The quarterly loss was, however, wider than the year-ago loss of $1.28.

Total revenues amounted to $406 million, down from $417 million a year ago. The top line marginally missed the Zacks Consensus Estimate of $407 million.

Higher utilization of Jackups supported the narrower-than-expected quarterly loss. This was however partly offset by a fall in average day rates for the floaters.

Segmental Performance

Floaters: Revenues came in at $233 million, down from the year-ago quarter’s $259 million. The fall in average day rates primarily led to the downturn.

Average day rates for the floaters fell 8.5% to $240,440. However, floaters reported utilization of 43%, almost in line with the year-ago quarter level.

Jackups: Revenues totaled $157 million, up from $143 million in the March quarter of 2018, thanks to higher utilization.

Average day rates fell to $72,146 from $73,529 in the prior-year quarter. However, rig utilization of the jackups was recorded at 68%, up from 61% in the year-ago quarter.

Other: Revenues from this segment were reported at $16 million, up from the year-ago quarter’s $15 million. It is to be noted that from $15 million in the March quarter of 2018, the company’s contract drilling expenses rose to $16 million.

Balance Sheet 

At the end of the March quarter of 2019, EnscoRowan had $298.4 million in cash and cash equivalents. Long-term debt was $5,018.5 million, with a net debt-to-capitalization ratio of 38.9%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 10.9% due to these changes.

VGM Scores

Currently, Ensco has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 F. 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 looks promising. Notably, Ensco has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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