ProPetro (PUMP) Down 1.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for ProPetro Holding (PUMP). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ProPetro 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 catalysts.
ProPetro Q2 Earnings and Revenues Lag Estimates
ProPetro Holding reported second-quarter 2023 earnings per share of 34 cents, which missed the Zacks Consensus Estimate of 41 cents. The underperformance could be primarily attributed to a 38% increase in costs and expenses year over year.
The bottom line, however, improved from the year-ago quarter’s reported loss of 32 cents due to increased activity in the reported quarter.
Revenues of $435.2 million missed the consensus mark of $441 million due to weather-related downtime. The figure improved 38.1% from the year-ago quarter’s level of $315.1 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 $112.8, down 5.4% from $119.2 million in the previous quarter. The reported also figure missed our estimate of $123.7 million. This underperformance was primarily due to costs associated with increased weather-related downtime and a dormant frac fleet during the quarter.
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 21.4% to $423.6 million from the prior-year quarter’s level. This was mainly due to higher fleet strength and enhanced pricing. However, the figure missed our estimate of $432.9 million.
Costs & Financial Position
Total costs and expenses amounted to $382.8 million for the second quarter, up 7.7% 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 $115.2 million on capital expenditure. It also recorded positive free cash flows of $6 million in the reported quarter.
As of Jun 30, PUMP had approximately $62.1 million in cash and cash equivalents. Including cash and $15 million under its revolving credit facility, the company had total liquidity worth $170 million at the end of June 2023. Long-term debt amounted to $60 million. The total debt-to-total capital was 5.6%.
Key Points
PUMP plans to deploy the first two FORCE electric frac fleets in 2023, with the first expected in August and the second in the fourth quarter. It also anticipates strong demand for electric equipment going forward.
The company plans to focus on strategy in the second half of 2023, despite headwinds and market concerns. PUMP anticipates strong financial performance and solid demand for its services.
Guidance
ProPetro’s guidance for average effective fleet utilization lies in the range of 14-15 fleets for the second half of 2023.
It projects CapEx in the band of $250-$300 million for 2023.
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 -30.84% due to these changes.
VGM Scores
At this time, ProPetro 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 quintile 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, ProPetro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
ProPetro is part of the Zacks Oil and Gas - Field Services industry. Over the past month, Baker Hughes (BKR), a stock from the same industry, has gained 1.5%. The company reported its results for the quarter ended June 2023 more than a month ago.
Baker Hughes reported revenues of $6.32 billion in the last reported quarter, representing a year-over-year change of +25.1%. EPS of $0.39 for the same period compares with $0.11 a year ago.
Baker Hughes is expected to post earnings of $0.39 per share for the current quarter, representing a year-over-year change of +50%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.3%.
Baker Hughes has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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