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RPC (RES) Rises 27.4% Since Q4 Earnings & Revenue Beat

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Zacks Equity Research
·4 min read
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RPC, Inc.’s RES shares have risen 27.4% since it beat earnings and revenue estimates on Jan 27. Investors lauded the fact that the company managed to remain debt free despite the volatile market scenario caused by the coronavirus pandemic. Moreover, it is expected to reduce expenditure and increase efficiencies in 2021.

Q4 Earnings Beat

It reported fourth-quarter 2020 loss of 3 cents per share, narrower than the Zacks Consensus Estimate of a loss of 9 cents. Moreover, the figure is lower than the year-ago loss of 7 cents per share.

The company reported quarterly revenues of $148.6 million, which surpassed the Zacks Consensus mark of $119 million. However, the top line plunged from the year-ago figure of $236 million.

The better-than-expected results came on the back of cost-reduction initiatives. It was also supported by rising activity levels in most of Technical Services unit’s service lines. However, massive loss in Support Services partially offset the positives.

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 loss in the Technical Services segment totaled $11.3 million, narrower than a loss of $17.2 million in the year-ago quarter. The improvement in the segment was supported by rising activity levels in most of the service lines, thanks to higher completion activities.

Operating loss in the Support Services segment came in at $2.6 million against the unit’s operating profit of $1.2 million in the year-ago quarter. The downside was caused by lower activities.

Total operating loss for the quarter was $21.6 million, narrower than the year-ago loss of $27.9 million. Average domestic rig count was 311 for the December-end quarter, indicating 62.1% fall from the year-ago level.

Cost and Expenses

Cost of revenues contracted from $176.9 million in fourth-quarter 2019 to $117.9 million. Moreover, selling, general and administrative expenses fell to $26 million for the quarter from the year-ago figure of $36.8 million.

Financials

RPC’s total capital expenditure for the December quarter of 2020 amounted to $12.8 million.

As of Dec 31, the company had cash and cash equivalents of $84.5 million, down sequentially from $145.6 million in the third quarter. Despite the volatile market scenario, it maintained a debt-free balance sheet.

Guidance

The company expects 2021 capital expenditures to be $55 million, lower than the 2020 figure of $65 million. It intends to take cautiously optimistic steps as the market recovers. As such, RPC will not likely increase equipment fleets until a profitable situation comes up.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Cactus, Inc. WHD, Suncor Energy Inc. SU and Ameresco, Inc. AMRC, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cactus’ bottom-line estimates for 2021 have increased nearly 14% in the past 60 days.

Suncor’s sales for 2021 are expected to increase 16.5% year over year.

Ameresco’s bottom line for 2021 is expected to increase 19.6% year over year.

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