Liberty Oilfield Services (LBRT) Up 3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Liberty Oilfield Services (LBRT). Shares have added about 3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Liberty Oilfield Services due for a pullback? 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.
Liberty Q2 Earnings and Revenues Miss Estimates
Liberty Energy reported second-quarter 2023 earnings of 87 cents per share, which missed the Zacks Consensus Estimate of 90 cents. The bottom line also outperformed the year-ago quarter’s figure of 55 cents. This improvement can be primarily attributed to strong equipment and services execution and higher activity in the reported quarter.
Revenues totaled $1.2 billion, which missed the Zacks Consensus Estimate (by 5.1%). The figure, however, beat the prior-year quarter’s level of $942.6 million by 26.8%.
The Denver-CO-based oil and gas equipment company’s adjusted EBITDA was $311.4 million compared with $196.1 million reported in the year-ago quarter. The figure is also higher than our projection of $287.4 million.
Liberty’s board of directors announced a cash dividend of 5 cents per common share, payable on Sep 20, 2023, to stockholders of record as of Sep 6, 2023.
As part of its shareholder return policy, LBRT repurchased shares worth $60 million at an average price of $12.71 per share.
Costs and Expenses
Liberty reported total costs and expenses of $988.5 million in the second quarter, up from the year-ago quarter’s $832 million. The figure is lower than our projected level of $1,104.4 million.
Balance Sheet & Capital Expenditure
As of Jun 30, LBRT had approximately $31.7 million in cash and cash equivalents. Its long-term debt of $288 million represented a debt-to-capitalization of 14.7%. The company’s liquidity, cash balance plus revolving credit facility, amounted to $226 million.
Liberty spent $151.7 million on its capital program in the reported quarter compared with $127 million in the year-ago period. The figure, however, missed our prediction of $158.8 million.
Guidance
The company expects frac fleet demand to follow rig count trends and remain stabilized in the second half of 2023. LBRT plans to accelerate completion activity. It expects Exploration and production (E&P) operators to benefit from lower well costs. Natural gas markets may not see an increase in activity until 2024, owing to an anticipated rise in LNG and Mexico exports.
Liberty expects that the supply cuts by OPEC+ and the reduction in global oil inventories will have a positive impact on global oil markets. The outlook is supported by a slowdown in production growth, a drop in oil inventories and a shift in focus toward replenishing strategic petroleum reserves in the United States.
Despite recessionary risks, the demand for oil remains resilient due to factors like pre-Covid travel trends, robust demand from India and emerging market strength. Underinvestment in global production capacity supports a resilient multi-year cycle for oil and gas.
However, the company thinks that the consolidated industry is better equipped to handle the near-term softness in completion activity by reducing fleet counts. The idea is to balance the market and protect margins.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -10.52% due to these changes.
VGM Scores
Currently, Liberty Oilfield Services has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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 indicates a downward shift. Notably, Liberty Oilfield Services has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Liberty Energy Inc. (LBRT) : Free Stock Analysis Report
