U.S. Markets close in 1 hr 11 mins

Why Core Labs Stock Is Tumbling Today

Matthew DiLallo, The Motley Fool

What happened

Shares of Core Labs (NYSE: CLB) slumped more than 10% by 2:30 p.m. EDT on Thursday. That sell-off came even though the oilfield service company's first-quarter results came in toward the high end of its guidance range.

So what

Core Labs recorded $169.2 million of revenue during the first quarter. While that was down 0.5% from the year-ago period, it was above the high end of the company's guidance range, for $164 million to $168 million, and ahead of the consensus estimate. Adjusted earnings, meanwhile, came in at $0.44 per share, which was nearly 23% below the year-ago level. However, it was toward the top end of Core's forecast range of $0.42 to $0.45 per share, and $0.01 per share ahead of the consensus estimate.

Oil pumps with a blue and red sky in the background

Image source: Getty Images.

Core's results were under pressure due to plunging oil prices at the end of last year, which forced oil companies to slow their drilling activities. While oil prices bounced back sharply during the first quarter, Core doesn't anticipate that it will provide a near-term boost to the service sector. Instead, the company sees drilling activities in the U.S. falling during the second quarter, while completion levels will be roughly flat. That's because U.S. drillers are remaining conservative about how they spend money, given all the volatility in crude prices.

Despite that tepid outlook, Core Labs does anticipate generating stronger results during the second quarter, a seasonally stronger one for the company. Overall, it sees revenue ranging between $172 million and $175 million and earnings ranging between $0.47 and $0.50 per share.

Now what

Investors likely expected better second-quarter guidance from Core Labs, due to the rebound in oil prices. However, after getting burned several times in the past few years, U.S. oil companies have become much more cautious.

On a more positive note, Core Labs does anticipate stronger results from its core offshore and international markets later this year, due to the start-up of several major projects. Those should provide a boost to its bottom line.

More From The Motley Fool

Matthew DiLallo owns shares of Core Laboratories. The Motley Fool recommends Core Laboratories. The Motley Fool has a disclosure policy.