ProPetro (PUMP) Down 10% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for ProPetro Holding (PUMP). Shares have lost about 10% 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 the most recent earnings report in order to get a better handle on the important catalysts.
ProPetro Q3 Earnings and Revenues Beat Estimates
ProPetro Holding reported third-quarter 2023 earnings per share of 31 cents, which beat the Zacks Consensus Estimate of 29 cents. The outperformance could be primarily attributed to improved pricing and increased activity in the reported quarter.
The bottom line, however, declined from the year-ago quarter’s reported level of 38 cents due to an 18.7% year-over-year increase in costs and expenses.
Revenues of $423.8 million beat the consensus mark of $411 million. The figure also improved 27.3% from the year-ago quarter’s level of $333 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 $107.7, down 4.5% from $112.8 million in the previous quarter. The reported figure also missed our estimate of $107.1 million. This underperformance was primarily due to lower activity and pricing 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 28.8% to $423.8 million from the prior-year quarter’s level. This was mainly due to higher fleet strength and enhanced pricing. The figure beat our estimate of $407.3 million.
Costs & Financial Position
Total costs and expenses were $379.1 million for the third quarter, up 18.7% from the prior-year quarter’s level. The service cost was $292.5 million compared with $224.1 million in the comparable period of 2022.
The company recorded $59 million capital expenditure. It also reported positive free cash flow of $27 million.
As of Sep 30, PUMP had approximately $54 million in cash and cash equivalents. Including cash and $126 million under its revolving credit facility, the company had total liquidity worth $180 million at September-end 2023. Long-term debt amounted to $45 million. The total debt-to-total capital was 4.6%.
Guidance
ProPetro expects effective fleet utilization to be in the range of 13-14 for the fourth half of 2023.
It anticipates total incurred capital expenditures to be slightly more than $300 million in 2023 compared with $365 million in 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -51.39% due to these changes.
VGM Scores
Currently, ProPetro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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.
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ProPetro Holding Corp. (PUMP) : Free Stock Analysis Report
