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Here's Why RPC (RES) Looks Poised to Beat on Q4 Earnings

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Zacks Equity Research
·4 min read
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RPC, Inc. RES is expected to beat fourth-quarter 2020 earnings estimates when it reports results on Jan 27, before the opening bell.

In the last reported quarter, the oilfield service firm beat the Zacks Consensus Estimate, thanks to cost-reduction initiatives, partially offset by lower drilling activities. As far as earnings surprise is concerned, the Atlanta, GA-based company is on a firm footing, as it beat the Zacks Consensus Estimate in the last four quarters, with the average being 24.1%. This is depicted in the graph below:

RPC, Inc. Price and EPS Surprise

RPC, Inc. Price and EPS Surprise
RPC, Inc. Price and EPS Surprise

RPC, Inc. price-eps-surprise | RPC, Inc. Quote

Let’s see how things have shaped up prior to the upcoming earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate of a loss of 9 cents per share has seen two upward estimate revisions and no downward movement over the past 30 days. The estimated figure suggests a decline of 28.6% from the prior-year reported number.

Further, the Zacks Consensus Estimate for revenues of $118.9 million indicates a 49.6% decline from the prior-year quarter.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for RPC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: RPC has an Earnings ESP of +30.23%. This is because the Most Accurate Estimate for the bottom line is pegged at a loss of 6 cents per share, while the Zacks Consensus Estimate for the same stands at a loss of 9 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: RPC currently carries a Zacks Rank #3.

Factors Driving the Better-Than-Expected Earnings

There has been a modest resumption of drilling operations in America and Canada in the fourth quarter. Prices of both West Texas Intermediate and Brent crude oil improved in the December quarter. This might have led to a rebound in drilling activities across shale plays, thereby boosting upstream spending. The chances of RPC delivering an earnings beat are high, supported by bullish sentiment of recovery in the U.S. energy market.

Moreover, the management’s moves to navigate through the volatile market is expected to have helped the company survive in the fourth quarter. Its decision to keep capital expenditure under check is expected to have helped save cash. Also, despite a tough competitive environment, the company had earlier expected to run five fleets in the fourth quarter, which would have provided effective utilization.

Other Stocks That Warrant a Look

Here are some other firms that you may want to consider as these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Diamondback Energy, Inc. FANG has an Earnings ESP of +2.12% and a Zacks Rank of #2, currently. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon Petroleum Company CPE has an Earnings ESP of +18.52% and is a Zacks #3 Ranked player. The company is scheduled to release fourth-quarter results on Feb 24. 

Continental Resources, Inc. CLR has an Earnings ESP of +51.81% and a Zacks Rank of 3. It is scheduled to report fourth-quarter results on Feb 16.

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Continental Resources, Inc. (CLR) : Free Stock Analysis Report
 
RPC, Inc. (RES) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
Callon Petroleum Company (CPE) : Free Stock Analysis Report
 
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