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Why Is RPC (RES) Up 35.9% Since Last Earnings Report?

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A month has gone by since the last earnings report for RPC (RES). Shares have added about 35.9% in that time frame, outperforming the S&P 500.

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

RPC Q4 Earnings & Revenues Beat Estimates

RPC reported adjusted earnings of 6 cents per share for the fourth quarter, beating the Zacks Consensus Estimate of 3 cents. The bottom line compares favorably with the year-ago loss of 3 cents.

Total quarterly revenues of $268.3 million outpaced the Zacks Consensus Estimate of $241 million. The top line also significantly improved from the year-ago figure of $148.6 million.

The strong quarterly results were due to higher activity levels in all the service lines and improved pricing.

Segmental Performance

Operating profit in the Technical Services segment totaled $20.5 million against a loss of $11.3 million in the year-ago quarter. The improvement can be attributed to higher activity levels in most service lines and improved pricing.

Operating loss in the Support Services segment was $373,000, narrower than the unit’s operating loss of $2.6 million in the year-ago quarter. The upside was caused by increased activities.

Total operating profit for the quarter was $20.1 million, significantly improving from the year-ago loss of $21.7 million. The average domestic rig count was 561 for the December-end quarter, reflecting an 80.4% increase from the year-ago level. The average oil price for the quarter was $77.27 per barrel. The same for natural gas was $4.73 per thousand cubic feet.

Cost and Expenses

Cost of revenues increased from $118 million in fourth-quarter 2020 to $200.6 million. Selling, general and administrative expenses increased to $32.1 million from the year-ago figure of $26 million.

The increased cost of revenues was mainly due to higher expenses related to increased activity levels, fuel costs and others.

Financials

RPC’s total capital expenditure for the December-end quarter of 2021 amounted to $22.7 million.

As of Dec 31, RPC had cash and cash equivalents of $82.4 million, up sequentially from $80.8 million. Nonetheless, the company managed to maintain a debt-free balance sheet.

Outlook

For 2022, RPC expects a capital expenditure of $125 million, indicating a significant increase from $67.6 million last year.

In the fourth quarter, RPC operated eight horizontal pressure pumping fleets. The company’s new Tier IV dual-fuel pressure pumping fleet, which came online in the Permian Basin at the end of the third quarter, boosted its utilization rate and profits in the reported quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 58.33% due to these changes.

VGM Scores

Currently, RPC has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise RPC has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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