TechnipFMC (FTI) To Report Q1 Earnings: Is A Beat In Store?

TechnipFMC plc (NYSE:FTI) is anticipated to beat earnings estimates in first-quarter 2018 results, after the closing bell on May 9.

While the company missed earnings estimates in the last reported quarter amid weak contribution from its Subsea segment, results are expected to improve this earnings season.

Why a Likely Positive Surprise?

Our proven model also shows that TechnipFMC is likely to beat earnings estimates in the to-be-reported quarter because it has the right combination of the two key ingredients.

Zacks ESP: Earnings ESP for this company is +13.92%. This is because the Most Accurate estimate of 37 cents is pegged higher than the Zacks Consensus Estimate of 32 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

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

What is Driving the Better-Than-Expected Earnings?

A leading manufacturer and supplier of technology solutions for the energy industry, TechnipFMC — whose peers include Core Laboratories N.V. (NYSE:CLB) and Baker Hughes among others — offers subsea, surface, onshore, and offshore solutions for oil and gas projects.

With the U.S. rig count falling to record levels in 2016, the oilfield services players were hit hard. Unprecedented declines in activity levels and a sharp fall in upstream spending led to lower revenues and pricing headwinds. However, with commodity prices improving and drilling activities picking up, the market for oilfield services companies is on the mend.

Per EIA data, the commodity rose about 7.5% in the first three months of 2018 to finish the quarter at $64.87 per barrel. In fact, the first quarter of the year saw the U.S. oil benchmark attain its highest settlement since December 2014, despite a record high domestic production. Crude was supported by various catalysts including strong demand, and continued production curb from OPEC and its allies. The recovering commodity market calls for higher investments from oil majors and increasing demand for drilling activities, translating into more contracts for companies like TechnipFMC.

Importantly, relentless cost reductions combined with excellent project execution are likely to enable the company deliver year-over-year operating profits across its segments.

Evidently, the Zacks Consensus Estimate for the Subsea segment’s operating profit for the to-be-reported quarter stands at $80 million compared with $54.2 million recorded in the first quarter of 2017. Adjusted EBITDA for the Onshore/Offshore segment is expected at $167 million, higher than the prior-year reported figure of $152.2 million. Rising momentum in the North American market is likely to boost revenues for the Surface Technologies to $373 million compared with $248.4 million sales recorded in the year-ago quarter. Further, on a more encouraging note, the Surface Technologies segment is expected to turnaround from an operating loss of $18.6 million in the year-ago quarter to report earnings of $53 million in the first quarter of 2018, on the back of a favorable product mix and leaner cost structure.

Other Energy Stocks Poised for a Beat

TechnipFMC is not the only energy firm looking up this earnings season. Here are some other companies within the energy space, which according to our model also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Leading energy transporter and distributor, Enbridge Inc. (NYSE:ENB) carries a Zacks Rank #3 and has an Earnings ESP of +5.88%. The company is slated to release results on May 10.

Independent oil and gas explorer Lilis Energy Inc. (NYSE:LLEX) has an Earnings EPS of +2.50% and carries a Zacks Rank #3. The Denver-based company is expected to unveil results on May 11. You can see the complete list of today's Zacks #1 Rank stocks here.

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