Noble Corporation (NE) Q2 Earnings: A Beat In The Cards?

Noble Corporation plc (NYSE:NE) is expected to report second-quarter 2016 earnings on Jul 27, 2016, after the market closes.

The company has a mixed earnings history. Noble Corp. beat the Zacks Consensus Estimate in two and missed the same in another two of the trailing four quarters. In the last reported quarter, the company delivered a negative earnings surprise of 8.82%.

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

Earnings Whispers

Our proven model shows that Noble Corp. is likely to beat on earnings because it has the perfect combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +14.29%. This is because the Most Accurate estimate stands at 8 cents, while the Zacks Consensus Estimate is pegged lower at 7 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank: Noble Corp. carries a Zacks Rank #3 (Hold), which when combined with a positive Earnings ESP, makes us confident about an earnings beat.

Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

What is Driving the Better-than-Expected Earnings?

Noble Corp. is a leading offshore drilling firm with a robust portfolio of assets. Though the industry has witnessed a setback in the past few months, the company is likely to be less impacted by it than its peers. This is because Noble Corp. enjoys a strong backlog position ($8.7 billion).

As of Mar 31, 2016, about 69% of the company's available rig operating days, including 54% of floating rig days and 87% of jackup rig days, were committed for the year. These secured commitments cushion the company from the volatile pricing market.

Currently, less oil being is discovered on land and hence, companies have to dig ever deeper to get to their reserves. This has turned out to be favorable for Noble Corp. as the company is poised to benefit from a market with robust multi-year demand trends, given its technologically advanced and versatile drilling fleet.

Additionally, Noble Corp. has been making continuous efforts to upgrade its fleet through acquisitions and newbuild projects. The company has also shown strong operational execution and cost-management efforts, which should reflect positively in the upcoming earnings.

Other Stocks to Consider

Here are some other companies to consider as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

SunCoke Energy Inc. (NYSE:SXC) has Earnings ESP of +400.00% and a Zacks Rank #1. The company is expected to release earnings on Jul 28.

Chesapeake Energy Corporation (NYSE:CHK) has Earnings ESP of +12.50% and a Zacks Rank #2. The company is anticipated to release earnings on Aug 4.

Spectra Energy Corp. (NYSE:SE) has Earnings ESP of +40.00% and a Zacks Rank #1. The company is likely to release earnings on Aug 3.