U.S. Silica (SLCA) Up 19.7% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for U.S. Silica Holdings, Inc. (NYSE:SLCA) . Shares have added about 19.7% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is SLCA 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.

U.S. Silica Q1 Earnings Top, Revenues Trail Estimates

U.S. Silica recorded a profit of $31.3 million or 39 cents per share in the first quarter of 2018, a significant rise from $2.5 million or 3 cents in the year-ago quarter.

Barring one-time items, the company’s adjusted earnings came in at 54 cents per share. It beat the Zacks Consensus Estimate of 45 cents.

U.S. Silica reported revenues of $369.3 million, up around 51% year over year. The figure however, missed the Zacks Consensus Estimate of $373 million.

Segment Highlights

Revenues for the Oil & Gas division were $312.9 million in the quarter, a roughly 62% year-over-year surge. Overall sales volume soared 28% in the quarter to around 3.252 million tons from 2.532 million tons in the prior-year quarter.

Revenues for the Industrial and Specialty Products (“ISP”) division came in at $56.4 million in the quarter, up 9% year over year. Overall sales volume rose 2% to around 0.877 million tons.

Financials

U.S. Silica had $329.5 million in cash and cash equivalents at the end of first quarter, down roughly 50.1% year over year.

Long-term debt dipped roughly 0.2% to $506.6 million and total debt was $510.9 million. Capital spending in the first quarter was $72.3 million.

Outlook

U.S. Silica continues to expect its capital expenditures for 2018 to be in the range of $300-$350 million, mainly due to the completion of capacity expansion projects that started last year and continued investments in Sandbox.

For the second quarter, the company expects volumes in the Oil & Gas segment to rise in the range of 10-15%. Moreover, the company expects spot pricing to continue to increase in the second quarter at mid-single digit clips. It also expects improved pricing and volumes for Sandbox in the second quarter.

For the ISP unit, the company expects a strong second quarter with higher volumes and margins, which is likely to be driven by a favorable product mix and positive seasonality.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to four lower.

U.S. Silica Holdings, Inc. Price and Consensus

VGM Scores

At this time, SLCA has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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

Based on our scores, the stock is more suitable for growth investors than those looking for value and momentum.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, SLCA has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.