Core Laboratories (CLB) Q1 Earnings: Will It Disappoint?

Oilfield services company Core Laboratories N.V. (NYSE:CLB) is set to report first-quarter 2017 results after the closing bell on Apr 19.

In the preceding quarter, this Amsterdam, Netherlands-based company’s earnings were in line with the Zacks Consensus Estimate. In fact, Core Laboratories’ earnings met estimates in each of the last four quarters.

Let’s see how things are shaping up for this announcement.

Factors at Play

Core Laboratories is an oilfield services company that provides reservoir management and production enhancement services to the global oil and gas industry.

The OPEC production cut in Nov 2016 has been a boon for energy firms. Increasing drilling activities and rig counts has been reflected in the price performance of the company.

However, during the first quarter, the commodity prices have declined, with crude oil reaching $47.01 per barrel in March. Even if commodity prices improve, the structural oversupply and pricing pressure will weigh on the sector components’ operating margins.

The company witnessed a rebound in the onshore U.S. markets due to a pick up in the shale drilling. However, Core Laboratories' exposure to international markets, where rig counts are still under pressure, remains a major concern. It is expected that positive results from the increasing activities in North America will offset weakness in the international markets. Meanwhile, higher taxes due to increased earnings could hinder growth.

Lack of new deepwater drilling orders has already begun to pose concerns to the subsea part of the industry. As the deepwater is not expected to rebound till next year, it could hinder the progress of the Core Laboratories in the near term.

Core Laboratories N.V. Price and Consensus

Earnings Whispers

Our proven model does not conclusively show that Core Laboratories is likely to beat earnings in the to-be reported quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 39 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Core Laboratories currently carries a Zacks Rank #4 (Sell), which further decreases the predictive power of ESP, making us less confident of an earnings surprise call. As it is, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

While earnings beat looks uncertain for Core Laboratories, here are some companies for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:

RPC, Inc. (OTC:RWEOY) is expected to release first-quarter earnings results on Apr 26. The company has an Earnings ESP of +25% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Emerge Energy Services LP (NYSE:EMES) is expected to release first-quarter earnings results on May 3. The partnership has an Earnings ESP of +14.29% and a Zacks Rank #2.

GulfMark Offshore, Inc (OTC:GLFM) is expected to release first-quarter earnings results on Apr 24. The company has an Earnings ESP of +15.19% and a Zacks Rank #2.

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