Weatherford (WFT) To Report Q3 Earnings: What's In Store?

Leading oilfield services company Weatherford International Ltd. (NYSE:WFT) is expected to report third-quarter 2017 earnings after the closing bell closes on Oct 31.

In the last reported quarter, the company’s earnings matched estimates. Weatherford’s average negative earnings surprise is 15.7% as it missed the Zacks Consensus Estimate in two of the trailing four quarters.

Factors Likely to Influence this Quarter

The Zacks Consensus Estimate for operating income from the Middle East/North Africa/Asia Pacific is $10.11 million, higher than last quarter’s $9 million and the year-ago quarter’s loss of $8 million. Last quarter, Weatherford received the maximum operating income from this region. The company expects the growing market share in this region to enable it to earn better revenues in the third quarter. However, project start-up costs may be a dampener.

For the Europe/SSA/Russia region, the Zacks Consensus Estimate for operating income is $6.51 million, higher than last quarter’s $5 million and the year-ago quarter’s loss of $3 million.

Moreover, the Zacks Consensus Estimate for operating revenue from North America regionis$539 million, higher than last quarter’s $475 million and the year-ago quarter’s $449 million. Last quarter, Weatherford received maximum operating revenues from this region. The company expects revenues from this region to increase in the third quarter despite no increase in rig count in the United States. Also, Canada is getting back on track after the spring break-up. On top of that, start of fresh U.S. oilfield services contracts, following the rise in oil prices, will favor the growth.

Earnings Whispers?

Our proven model does not conclusively show that Weatherford is likely to beat on earnings this quarter. This 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 -1.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Weatherford’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

Canadian Natural Resources Limited (TO:CNQ) is an exploration and production company. It has an Earnings ESP of +1.08% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Denbury Resources Inc. (NYSE:DNR) is an exploration and production company based in Plano, TX. It has an Earnings ESP of +11.11% and a Zacks Rank #2.

Cenovus Energy Inc (TO:CVE) is an integrated oil major from Canada. The company has an Earnings ESP of +40% and a Zacks Rank #2.

Q3 Price Performance

During the quarter, Weatherford gained 18.3% compared with 6.3% growth of its industry.

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