News

A month has gone by since the last earnings report for ProPetro Holding (PUMP). Shares have added about 22.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is ProPetro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

ProPetro Q3 Earnings Beat Estimates

ProPetro reported third-quarter 2024 adjusted earnings per share of 12 cents which beat the Zacks Consensus Estimate of 3 cents. This outperformance could be primarily attributed to improved pricing and increased activity in the reported quarter. The bottom line, however, declined from the year-ago quarter’s reported level of 31 cents due to a 42.7% year-over-year increase in costs and expenses.

Revenues of $360.9 million beat the consensus mark of $358 million. However, the figure decreased 14.8% from the year-ago quarter’s level of $423.8 million. This was due to a year-over-year decline in service revenues from Hydraulic Fracturing and Wireline operations.

Adjusted EBITDA amounted to $71.1 million, down 34% from $107.7 million reported in the previous quarter.

On April 24, the company revealed a $100 million increase to its share repurchase program, raising the total to $200 million and extending the plan until May 2025. In the third quarter, PUMP repurchased and retired 1.3 million shares at a cost of $10 million. To date, the company has acquired and retired 12.6 million shares, accounting for about 11% of its total outstanding shares.

The net loss was $137 million, a significant increase from a net loss of $4 million in the previous quarter. This third-quarter net loss included a non-cash impairment charge of $189 million related to the company's Tier II diesel-only pumping units and associated conventional equipment in hydraulic fracturing segment, which now represents a decreasing portion of active fleets.

In the third quarter, the company announced that three FORCE electric-powered hydraulic fracturing fleets are currently operating under contract with major customers. A fourth fleet is expected to be deployed by the end of the year, followed by a fifth fleet set for early 2025.

Pressure Pumping

ProPetro provides hydraulic fracturing, cementing and acidizing functions through its Pressure Pumping segment. The business contributed 100% to PUMP's total revenues in the quarter under review.

Service revenues from this unit decreased 14.8% to $360.9 million from the prior-year quarter’s level. However, the figure was higher than our estimate of $355.9 million.

Costs & Financial Position

Total costs and expenses were $541 million for the third quarter, which was up 42.7% from the prior-year quarter’s level. The cost of services (exclusive of depreciation and amortization) was $267.6 million compared with $292.5 million in the prior-year quarter. The loss on disposal of assets totaled $2.1 million compared with $12.7 million in the prior-year quarter.

In the third quarter of 2024, the company recorded $37 million in capital expenditures, primarily for maintenance and support equipment for FORCE electric hydraulic fracturing fleets. The statement of cash flows indicated that net cash used in investing activities amounted to $40 million for the quarter.

As of Sept. 30, PUMP had $46.6 million in cash and cash equivalents and $45 million in borrowings under its ABL Credit Facility. Total liquidity stood at $127 million, including $80 million in available credit in September end. Long-term debt amounted to $45 million. The total debt-to-total capital was 5.1%.

Net cash provided by operating activities decreased to $214.4 million in this quarter, which was down from $104.9 million in the last quarter. Free cash flow decreased to approximately negative $5 million, down from $47.9 million in the previous quarter.

Guidance

The company anticipates a reduction in its 2024 capital expenditure guidance for the second time this year, now estimating between $150 million and $175 million, which was down from the previous range of $175 million to $200 million.

In the third quarter, 14 hydraulic fracturing fleets were active and management expects to maintain the same in the fourth quarter of 2024.

The company expects that while some industry softness may be experienced in the fourth quarter due to normal seasonality and budget exhaustion, demand for its services remains strong.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 142.86% due to these changes.

VGM Scores

At this time, ProPetro has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 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.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ProPetro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

ProPetro belongs to the Zacks Oil and Gas - Field Services industry. Another stock from the same industry, Schlumberger (SLB), has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.

Schlumberger reported revenues of $9.16 billion in the last reported quarter, representing a year-over-year change of +10.2%. EPS of $0.89 for the same period compares with $0.78 a year ago.

For the current quarter, Schlumberger is expected to post earnings of $0.91 per share, indicating a change of +5.8% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Schlumberger. Also, the stock has a VGM Score of B.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.