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Why Is RPC (RES) Down 1% Since Last Earnings Report?

·3 min read

It has been about a month since the last earnings report for RPC (RES). Shares have lost about 1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is RPC due for a breakout? 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 catalysts.

RPC Misses Q1 Earnings, Tops Revenue Estimates

RPC reported first-quarter 2021 loss of 5 cents per share, wider than the Zacks Consensus Estimate of a loss of 3 cents. Moreover, the figure deteriorated from the year-ago loss of 4 cents per share.

It reported quarterly revenues of $182.6 million, which surpassed the consensus mark of $164 million. However, the top line plunged from the year-ago figure of $243.8 million.

The weak first-quarter earnings were caused by lower activities and decreased pricing. Adverse weather in February affected the quarterly activity levels. The negatives were partially offset by lower costs and expenses.

Segmental Performance

Operating loss in the Technical Services segment totaled $5.8 million, narrower than a loss of $12.2 million in the year-ago quarter. The improvement was supported by rising activity levels in most of the service lines.

Operating loss in the Support Services segment came in at roughly $3 million against the unit’s operating profit of $1.5 million in the year-ago quarter. The downside was caused by lower activities.

Total operating loss for the quarter was $10.5 million, narrower than the year-ago loss of $218.7 million. Average domestic rig count was 396 for the March quarter, reflecting 49.6% fall from the year-ago level.

Cost and Expenses

Cost of revenues contracted from $181.9 million in first-quarter 2020 to $146.2 million. Moreover, selling, general and administrative expenses fell to $30.6 million for the quarter from the year-ago figure of $36.5 million.

Financials

RPC’s total capital expenditure for the March quarter of 2021 amounted to $11.8 million.

As of Mar 31, the company had cash and cash equivalents of $85.4 million, up sequentially from $84.5 million in the fourth quarter. Despite the volatile market scenario, it maintained a debt-free balance sheet.

Guidance

The company reiterated its 2021 capital expenditures guidance at $55 million, indicating a decline from the 2020 figure of $65 million. It intends to take cautiously optimistic steps as the market recovers. As such, RPC will not likely increase equipment fleets until a profitable situation comes up. Higher oil prices are favoring increased customer spending.

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 11.11% due to these changes.

VGM Scores

At this time, RPC has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, RPC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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