Send me real-time posts from this site at my email

Superior Energy Services' Stock Drops on Disappointing Earnings

What happened

Shares of oil services company Superior Energy Services (NYSE: SPN) were down 14.8% as of 3:30 p.m EDT today. The stock drop comes after the company released first-quarter earnings results that were below Wall Street expectations.

Image source: Getty Images.

So what

After the close of the market yesterday, Superior reported a net loss per share of $0.31. While management said that the result was in line with its expectations, Wall Street had other plans. Analyst expectations for the quarter were for a loss of $0.24 per share.

Even though this most recent quarter's result was better than this time last year, Superior was facing several headwinds including lower demand for its pressure-pumping services in shale basins. This theme was common in the fourth quarter: Many oil and gas producers elected to complete fewer wells, because of exhausted capital budgets and a lack of pipeline takeaway capacity. While there are several new pipes under construction, takeaway capacity will likely remain constrained for several more months in red-hot shale basins like the Permian in Texas.

Now what

Because of the uncertainty around what U.S. onshore producers will do for the next several months, Superior's management intends to focus more of its capital spending on offshore and international markets. That sounds like a good plan, but it's worth noting that more than 65% of its revenue comes from U.S. onshore drilling activity.

So Superior's results for the rest of 2019 will pretty much follow whatever happens in the U.S. onshore market. As long as there are capacity constraints and more services equipment than needed, Superior's results are going to suffer.

10 stocks we like better than Superior Energy Services
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Superior Energy Services wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome!!! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue