What's In The Cards For Weatherford (WFT) In Q1 Earnings?

Leading oilfield services company Weatherford International Ltd. (NYSE:WFT) is expected to report first-quarter 2017 earnings on Apr 28.

The company has a mixed earnings history. Weatherford beat the Zacks Consensus Estimate in two and missed the same in the other two of the trailing four quarters with an average negative surprise of 16.09%. In the last reported quarter, the company had a positive earnings surprise of 3.03%.

Factors at Play

Although crude ended the first quarter of this year 5.8% lower, the pricing environment of commodity prices was much healthier than the year-ago quarter, courtesy of the historical OPEC agreement.

Hence, January–March quarter of this year was favorable for oil exploration and production (E&P) companies. The improved rig count data issued by Baker Hughes Inc. (NYSE:BHI) clearly indicates that more and more of these firms are gathering to the U.S oil patches. An increase in E&P activities will result in more contracts for oilfield services players like Weatherford to efficiently set up oil wells, in turn boosting earnings.

Also, shares of Weatherford outperformed the Zacks categorized Oil Field Mechanical & Equipment industry in the first quarter. During the period, shares of the company gained 33.3% compared with 0.6% improvement for the broader industry.

However, the Zacks Consensus Estimate for first quarter has been revised from a loss of 29 cents to a loss of 30 cents over a period of last 30 days.

Earnings Whispers

Our proven model does not conclusively show that Weatherford is likely to beat on earnings this 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: Weatherford has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 30 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Weatherford carries a Zacks Rank #3, which increases the predictive power of ESP. However, its Earnings ESP of 0.00% makes surprise prediction inconclusive.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some other companies from the energy sector that you may want to consider as these have the right combination of elements to post an earnings beat this quarter

Chesapeake Energy Corp. (NYSE:CHK) has an Earnings ESP of +5.00% and a Zacks Rank #3. The company is expected to release earnings on May 4.

Southwestern Energy Company (NYSE:SWN) has an Earnings ESP of +5.88% and a Zacks Rank #3. The company is expected to release earnings on Apr 27.

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