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Silica Holdings (SLCA) Moves 10.7% Higher: Will This Strength Last?

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  • SLCA

Silica Holdings (SLCA) shares rallied 10.7% in the last trading session to close at $10.26. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 23.3% loss over the past four weeks.

Better-than-expected first-quarter 2021 revenues and earnings drove the stock higher. The company’s adjusted loss per share of 27 cents was narrower than the Zacks Consensus Estimate of a loss of 30 cents. Revenues of $234.4 million also surpassed the Zacks Consensus Estimate of $216.2 million. The company benefited from higher sales volumes across its segments.

The company also provided an upbeat outlook. It expects the Industrial & Specialty Products segment growth to outpace U.S. GDP. The company sees contribution margin of the segment to increase 5-10% sequentially in the second quarter. In the Oil & Gas segment, it expects a strong energy recovery as economic activity rebounds and gains momentum. For the second quarter, contribution margin is projected to increase 30-35%.

Price and Consensus

Price Consensus Chart for SLCA
Price Consensus Chart for SLCA

This commercial silica producer is expected to post quarterly loss of $0.17 per share in its upcoming report, which represents a year-over-year change of -88.9%. Revenues are expected to be $232.9 million, up 35% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Silica Holdings, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SLCA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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