ProPetro (PUMP) Up 5.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for ProPetro Holding (PUMP). Shares have added about 5.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ProPetro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
ProPetro's Q1 Earnings Miss, Revenues Beat
ProPetro Holding Corp. reported first-quarter 2023 earnings per share of 40 cents, which missed the Zacks Consensus Estimate of 49 cents. The underperformance could be primarily attributed to a 38% increase in costs and expenses year over year.
The bottom line improved from 11 cents in the prior-year period due to increased activity in the reported quarter.
Revenues of $423.6 million outpaced the consensus mark of $410 million. The figure also increased 49.8% from the year-ago quarter’s $282.7 million. This was due to improved pricing and fleet repositioning, additional net pricing gains, a favorable job mix and strong Hydraulic Fracturing performance.
Adjusted EBITDA amounted to $119.2 million, up 77% from $67 million in the previous quarter. The increase is primarily attributable to additional net pricing gains and continued fleet repositioning.
Pressure Pumping
ProPetro provides hydraulic fracturing, cementing and acidizing functions through its Pressure Pumping segment. The business contributed 100% to PUMP's total revenues in the quarter under review. Service revenues from this unit surged about 49.8% to $423.6 million from the prior-year quarter’s level. This was mainly due to higher fleet strength and enhanced pricing.
Costs & Financial Position
ProPetro’s first-quarter total costs and expenses amounted to $382.1 million, up 38% from the prior-year quarter’s level. The service cost was $280.5 million compared with $197.3 million in the comparable period of 2022.
The company spent $97.2 million on capital expenditure. It also recorded negative free cash flows of $40.7 million in the first quarter.
As of Mar 31, PUMP had approximately $44.8 million in cash and cash equivalents. Including cash and $30 million under its revolving credit facility, the company had total liquidity worth $149 million at the end of March 2023. Long-term debt amounted to $30 million. The total debt-to-total capital was 3%.
Guidance
ProPetro’s guidance for average effective fleet utilization is between 15 and 16 fleets for the second quarter.
The company’s projection for 2023 CapEx spending is at $250-$300 million.
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 -23.36% due to these changes.
VGM Scores
At this time, ProPetro has a strong 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. It's no surprise ProPetro has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
ProPetro belongs to the Zacks Oil and Gas - Field Services industry. Another stock from the same industry, RPC (RES), has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
RPC reported revenues of $476.67 million in the last reported quarter, representing a year-over-year change of +67.5%. EPS of $0.39 for the same period compares with $0.07 a year ago.
For the current quarter, RPC is expected to post earnings of $0.43 per share, indicating a change of +95.5% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for RPC. Also, the stock has a VGM Score of A.
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