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Why Is ProPetro (PUMP) Up 11.8% Since Last Earnings Report?

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A month has gone by since the last earnings report for ProPetro Holding (PUMP). Shares have added about 11.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ProPetro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

ProPetro Incurs Wider-Than-Expected Q1 Loss, Revenues Miss

ProPetro reported first-quarter adjusted net loss of 20 cents per share, wider than the Zacks Consensus Estimate of a loss of 17 cents. However, the bottom line deteriorated from the year-ago quarter’s earnings of 21 cents per share. This underperformance was due to lower-than-expected revenue contribution from the Pressure Pumping unit. The segment reported revenues of $158.2 million, falling short of the consensus mark of $164 million. Moreover, the same declined 59.1% year over year.

Quarterly revenues of $161.46 million missed the Zacks Consensus Estimate sales of $170 million and also declined more than 59.1% from the year-ago quarter.

The oilfield service provider’s adjusted EBITDA in the first quarter amounted to $20 million, down from $74.9 million in the year-ago quarter. The loss of profitability due to the severe winter weather event in February as well as fleet reactivation costs induced the decrease in Adjusted EBITDA.

ProPetro’s adjusted EBITDA of $31.87 million in its Pressure Pumping unit during the March quarter missed the Zacks Consensus Estimate of $34.56 million. Investors should know that pressure pumping is the main contributor to the company’s earnings.

Pressure Pumping Division

The Midland, TX-based company provides hydraulic fracturing, cementing and acidizing functions through the Pressure Pumping segment. The business contributed 98% to the company's total revenues in the quarter under review. Service revenues plunged 59.1% from the prior-year quarter’s levels to $158.2 million due to weather disruption.

Costs & Expenses

ProPetro reported service cost of $123 million in the first quarter, down 59.1% from the year-ago quarter. General and administrative expenses were $20 million, down 19.7% from $24.9 million in the prior-year quarter.

Balance Sheet & Capital Expenditures

As of Mar 31, 2021, ProPetro had cash and cash equivalents worth $55.9 million and did not incur any long-term debt. It also had $58 million under its revolving credit facility. Capital expenditures in the March quarter of 2021 summed $32 million, down 20.2% from the first-quarter 2020 level.

Guidance

ProPetro expects full-year capital expenditures in the $115-$130 million range, based on its current and expected activity levels. It allocated approximately $37 million to its Tier IV DGB dual-fuel equipment investment of 90,000 HHP while the rest constitutes maintenance spending mainly.

Phillip Gobe, CEO of ProPetro said, “As the COVID-19 vaccine rollout continues to progress, the strengthening outlook for crude oil demand has positive implications for the oilfield services sector. While we are excited to see signs of improvement in the broader economy, we remain disciplined in our approach to enhancing shareholder value. Our conservative, debt-free balance sheet, combined with our unique advantages in collaboration and wellsite execution, will continue to differentiate our Company as we move through the remainder of the year and into a multi-year recovery in the Permian Basin.”

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, ProPetro has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, ProPetro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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