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RPC (RES) Down 5.3% Despite Q2 Earnings and Revenue Beat

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RPC, Inc.’s RES stock price fell 5.3% despite reporting strong second-quarter results on Jul 27. Investors are probably worried that increasing labor and raw materials prices might continue to hurt RPC in providing its services.

RES reported adjusted earnings of 22 cents per share in the second quarter, beating the Zacks Consensus Estimate of 10 cents. The bottom line compares favorably with the year-ago quarter’s break-even earnings.

Total quarterly revenues of $376 million beat the Zacks Consensus Estimate of $322 million. The top line significantly improved from the year-ago figure of $189 million.

The strong quarterly earnings were backed by higher activity levels in all the service lines and improved pricing.

RPC, Inc. Price, Consensus and EPS Surprise

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

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

Segmental Performance

Operating profit in the Technical Services segment totaled $59.8 million, higher than year-ago quarter’s profit of $1.4 million. The upside was caused by increased customer activities along with higher pricing.

Operating profit in the Support Services segment was $3.3 million, turning around from a year-ago loss of $2.4 million. The improvement was owing to a hike in pricing within rental tools along with increased activities.

Total operating profit in the quarter was $60.4 million against the year-ago loss of $1.2 million. The average domestic rig count was 719, reflecting a 58.7% increase from the year-ago level. The average oil price in the quarter was $109.00 per barrel. The same for natural gas was $7.49 per thousand cubic feet.

Cost and Expenses

In second-quarter 2022, the cost of revenues increased from $145.8 million to $260.9 million. Selling, general and administrative expenses increased to $35.9 million from the year-ago figure of $29.4 million.

Financials

As of Jun 30, RPC had cash and cash equivalents of $78.2 million. The company managed to maintain a debt-free balance sheet.

Zacks Rank & Other Stocks to Consider

RPC currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the energy space include Exxon Mobil Corporation XOM, BP plc BP and Range Resources RRC. While Range Resources carries a Zacks Rank #2 (Buy), ExxonMobil and BP sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

ExxonMobil’s upstream operation is benefiting from high oil price. Recently, XOM reported strong earnings thanks to higher realized commodity prices and solid refinery utilization, offset partially by increased ethane feed costs in North America. In 2022, ExxonMobil is likely to see earnings growth of 131%.

High oil prices are aiding BP’s upstream operations. Its sizable refining and marketing operations will protect it if the crude pricing scenario turns unfavorable again. For 2022, it is likely to witness earnings growth of 108.6%. Over the past few quarters, BP has successfully been reducing long-term debt.

Efficient operations and higher prices of commodities are aiding Range Resources in generating significant cashflows. For 2022, Range Resources is likely to witness earnings growth of 167.3%.


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