The Zacks Analyst Blog Highlights:Schlumberger, Gulfmark Offshore, Ocean Rig UDW, Stone Energy and Constellation Brands
CHICAGO, Oct. 17, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Schlumberger Limited (NYSE:SLB-Free Report), Gulfmark Offshore Inc. (NYSE:GLF-Free Report), Ocean Rig UDW Inc. (Nasdaq:ORIG-Free Report), Stone Energy Corp. (NYSE:SGY-Free Report) and Constellation Brands Inc. (NYSE:STZ-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Will Schlumberger (SLB) Beat Estimates This Quarter?
Leading oilfield services company, Schlumberger Limited (NYSE:SLB-Free Report) is set to report its third-quarter 2013 results on Oct 18. Let's see how things are shaping up prior to the announcement.
In the last quarter, the company's earnings of $1.15 per share increased 9.5% year over year from $1.05. The quarterly results were aided by the company's strong international exposure along with focus on execution and integration capabilities. Also, the results were ahead of the Zacks Consensus Estimate of $1.11.
Growth Factors this Past Quarter
In the second quarter, Schlumberger recorded total revenue of $11.18 billion up 8.1% from the year-earlier level of $10.34 billion and ahead of the Zacks Consensus Estimate of $11.11 billion.
Schlumberger's overall outlook for 2013 remains largely unchanged from its earlier projections. The company remains unperturbed despite the main economies including China, the U.S. and the Eurozone witnessing mixed fortunes in the second quarter. As a result both oil and gas prices also are following a sideways trend in pricing reflecting the mixed nature of the global economy. Looking forward, Schlumberger's optimism on rising rig count and customer activity will likely lead to its increased international spending on exploration, higher production and stepped up activity in the U.S. Gulf of Mexico. The company also expects steady growth in key regions that include Sub-Sahara Africa, Russia, the Middle East, China and Australia. The oilfield services behemoth believes that strong leverage to the deepwater segment will aid it performance over the coming years. While the company makes most of its money outside North America, it bears the brunt of industry-wide weakness in U.S. hydraulic fracturing services as well as softness in the land coiled-tubing business.
Earnings Whispers?
Our proven model conclusively shows that Schlumberger 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, 2 or 3 for this to happen. This is the case here as you will see below. Zacks ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.81%. This is because the Most Accurate estimate is at $1.25 while the Zacks Consensus Estimate currently stands at $1.24.
Zacks Rank: Schlumberger's Zacks Rank #2 (Buy) increases the predictive power of ESP because the Rank when combined with an ESP of +0.81% indicates the possibility of positive results. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
Gulfmark Offshore Inc. (NYSE:GLF-Free Report), earnings ESP of +3.09% and a Zacks Rank #1 (Strong Buy).
Ocean Rig UDW Inc. (Nasdaq:ORIG-Free Report), earnings ESP of +100.00% and a Zacks Rank #1 (Strong Buy).
Stone Energy Corp. (NYSE:SGY-Free Report), earnings ESP of +6.76% and a Zacks Rank #1 (Strong Buy).
Constellation Brands Upped to Outperform
We have upgraded Constellation Brands Inc. (NYSE:STZ-Free Report) to Outperform based on its better-than-expected second quarter bottom-line results and upbeat guidance for fiscal 2014. The company – which is a global producer and marketer of beer, wine and spirits – became a Zacks Rank #1 (Strong Buy) stock shortly after announcing second-quarter results.
Why the Upgrade?
Constellation Brands' second-quarter fiscal 2014 adjusted earnings per share came in at 96 cents, handily beating the Zacks Consensus Estimate of 89 cents and up 35.2% on a year-over-year basis. The major driving factor was consolidation of the Crown Imports business.
Further, management raised its guidance for fiscal 2014 based on impressive quarterly results and leverage from the Grupo Modelo acquisition. Constellation Brands now expects fiscal 2014 adjusted earnings to come in the range of $2.80–$3.10 per share, compared with $2.60–$2.90 projected earlier.
Following the second-quarter results, the Zacks Consensus Estimate for fiscal 2014 and 2015 moved up 5.3% and 4.7% to $2.98 and $3.75 per share, respectively, over the last 30 days.
Overall, we are optimistic about Constellation Brands' prospects. This is because apart from strong second-quarter results, the company has carved a niche for itself with a formidable portfolio of well-known brands.
Moreover, Constellation Brands' focus on brand building and its growth initiatives have helped it to achieve steady depletion trends and increase market share in the U.S. wine and spirits category. Further, the company has been pursuing strategic acquisitions in order to strengthen its foothold in the U.S. wine industry and to increase its portfolio of brands. The buyout of Grupo Modelo has proved to be accretive to the company's earnings.
We believe that such initiatives, along with inorganic expansion efforts, will likely aid Constellation Brands' long-term growth.
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