Will TechnipFMC (FTI) Disappoint Investors In Q4 Earnings?

TechnipFMC plc (NYSE:FTI) is set to release fourth-quarter 2017 results on Feb 21, after the closing bell.

A leading manufacturer and supplier of technology solutions for the energy industry, TechnipFMC offers subsea, surface, onshore and offshore solutions for oil and gas projects.

In the prior quarter, this London-based company reported weaker-than-expected earnings amid reduced project activities in Europe and Africa.

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

Factors to Consider

Though oil prices have recovered from the historical lows, prices still linger around $60 per barrel, which is far below the breakeven price for many oil and gas firms even now. As a result, many energy companies continue to reduce spending and equipment suppliers like TechnipFMC struggle to protect its backlog amid the volatile price environment. For the fourth quarter, the Zacks Consensus Estimate for the total backlog order is pegged at $12,854 million against $13,902.4 million reported in the prior quarter. The backlog for subsea technologies is anticipated at $5,680 million against $5,949 million reported in third-quarter 2017. The Surface Technology backlog is also expected to decline to $352 million against 394.2 million reported in the previous quarter.

Further, analysts polled by Zacks expect revenues of $3,834 million for the quarter, down from the prior-year quarter figure of $4,141 million. The Zacks Consensus Estimate for the revenues of the Onshore/Offshore segment is pegged at $1,867 million, lower than $2,308 million recorded in the prior quarter. Moreover, TechnipFMC’s subsea segment, which was once the largest and fastest-growing unit of FTI, is also facing pressure on its revenues and margins. In the last quarter, Subsea revenues and profits declined 37% and 71.3% year over year.

The company has already cautioned that 2017 would be a difficult year with order growth set to remain weak. All these factors account for bleak earnings outlook for the company in fourth-quarter 2017.

Earnings Whispers

Our proven model does not conclusively show that TechnipFMC is likely to beat earnings estimates 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 for the company is -5.02%. This is because the Zacks Consensus Estimate is pegged at 44 cents while the Most Accurate Estimate stands at 42 cents. 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 #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

While an earnings beat looks uncertain for TechnipFMC, here are some companies you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat:

Houston, TX-based EOG Resources (NYSE:EOG) is an upstream company. It has an Earnings ESP of +4.06% and a Zacks Rank of 1. The company is scheduled to release fourth-quarter earnings on Feb 27. You can see the complete list of today’s Zacks #1 Rank stocks here.

WildHorse Resource Development Corporation (NYSE:WRD) , based in Houston, TX, is also an upstream energy firm. It has an Earnings ESP of + 5.26% and a Zacks Rank #1. The company is slated to release fourth-quarter earnings on Mar 7.

Dallas, TX-based RSP Permian, Inc. (NYSE:RSPP) is an upstream energy company with an Earnings ESP of +1.64%. It is a Zacks #1 Ranked player. It is expected to unveil fourth quarter earnings on Feb 27.

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