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What's in Store for Core Laboratories (CLB) in Q4 Earnings?

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Zacks Equity Research
·4 min read
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Core Laboratories N.V. CLB is scheduled to release fourth-quarter 2020 results on Wednesday Jan 27, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 15 cents while the same for revenues stands at $108.87 million.

Against this backdrop, let’s analyze the factors that might have impacted the company’s performance in the September quarter.

Factors at Play

Core Laboratories’ cost-reduction efforts have been raising investors’ optimism. In June 2020, the company had entered the second phase of its cost-cutting measures wherein the total annualized cost savings were estimated at $61 million.These cost-control measures are further expected to have driven the company’s fourth-quarter earnings and cash flows higher.

Additionally, Core Laboratories’ Production Enhancement segment is expected to have aided the company’s performance. The Zacks Consensus Estimate for the unit’s operating income, which is associated with the completion of wells, is pegged at $300,000. However, the segment reported an operating loss of $300,000 in the sequential quarter.

Meanwhile, the Zacks Consensus Estimate for the segment’s revenues is pegged at $27.05 million, suggesting an improvement from the sequential quarter’s reported figure of $25.32 million.

On the flip side, echoing the third-quarter trend, the continued coronavirus-led disruptions posed additional stumbling blocks to operators and service companies to cope with as well as induced extra expenses and operational incompetence during the fourth quarter.

Highlights of Q3 Earnings & Surprise History

In the last reported quarter, Core Laboratories’ adjusted earnings of 16 cents a share came ahead of the Zacks Consensus Estimate of 14 cents. This outperformance is attributable to lower year-over-year operating expenses, which declined to $94.1 million in the third quarter from $142 million in the year-ago period. However, the bottom line declined from the year-ago quarter’s earnings of 50 cents per share. This downside was caused by a drop in both international product sales and a ramped-down activity on international projects.

The oilfield service provider’s adjusted revenues of $105.38 million missed the Zacks Consensus Estimate of $109 million. Moreover, the top line fell from the year-ago quarter’s sales of $173.2 million.

As far as its earnings surprises are concerned, this Netherlands-based company’s bottom line outpaced the Zacks Consensus Estimate in two of the trailing four quarters, missing the same in one and meeting estimates on the remaining occasion, the average surprise being 15.26%. This is depicted in the graph below:

Core Laboratories N.V. Price and EPS Surprise

Core Laboratories N.V. Price and EPS Surprise
Core Laboratories N.V. Price and EPS Surprise

Core Laboratories N.V. price-eps-surprise | Core Laboratories N.V. Quote

What Does Our Model Say?

Our proven model does not conclusively predict an earnings beat for Core Laboratories this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter . 

Earnings ESP: Core Laboratories has an Earnings ESP of -4.00%.

Zacks Rank: Core Laboratories carries a Zacks Rank #3, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While earnings outperformance looks uncertain for Core Laboratories, here are some firms worth considering from the energy space on the basis of our model, which shows that these have the perfect combination of ingredients to deliver a beat this reporting cycle:

NuStar Energy L.P. NS has an Earnings ESP of +21.21% and a Zacks Rank of 1, currently. The company is scheduled to release earnings on Feb 4.

PattersonUTI Energy, Inc. PTEN has an Earnings ESP of +4.99% and is Zacks #3 Ranked, currently. The company is scheduled to release earnings on Feb 4.

Plains All American Pipeline, L.P. PAA has an Earnings ESP of +32.81% and is a #3 Ranked stock, currently. The firm is scheduled to release earnings on Feb 9.

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