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What’s in Store for Baker Hughes (BHI) this Earnings Season?


Oilfield services firm Baker Hughes Incorporated BHI is set to report first-quarter 2017 results on Apr 25, before the opening bell.

Last quarter, the company incurred loss from continuing operations (excluding special items) of 30 cents per share, much wider than the Zacks Consensus Estimate of a loss of 12 cents as well as the year-ago loss of 21 cents. Let’s see how things are shaping up for this announcement.

Baker Hughes Incorporated Price and EPS Surprise

Baker Hughes Incorporated Price and EPS Surprise | Baker Hughes Incorporated Quote

Factors at Play

Overall, the first quarter was favorable for oil exploration and production (E&P) companies. These firms continued to gather to the oil patches as evidenced by the improved rig count data issued by Baker Hughes. Definitely, increase in E&P activities will result in more contracts for oilfield services players like Baker Hughes to efficiently set up oil wells.

Also, the stock has showed strong pricing strength in the last three months, which raises optimism. During the aforesaid period, Baker Hughes shares lost 3.1% compared with 12.7% decline for the Zacks categorized Oil & Gas–Field Services industry.

However, the Zacks Consensus Estimate for first quarter has widened from a loss of 20 cents to a loss of 19 cents over the last 30 days.

Earnings Whispers

Our proven model does not conclusively show that Baker Hughes is likely to beat the Zacks Consensus Estimate in the first 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. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: The Earnings ESP for Baker Hughes is -25.00%. This is because the Most Accurate estimate is pegged at a loss of 25 cents and the Zacks Consensus Estimate stands at a loss of 20 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Baker Hughes has a Zacks Rank #3, which increases the predictive power. However, the company’s negative Earnings ESP makes surprise prediction inconclusive.

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

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Williams Partners L.P. WPZ has an Earnings ESP of +12.12% and a Zacks Rank #3. The partnership is expected to release earnings on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chesapeake Energy Corp. CHK has an Earnings ESP of +31.58% and a Zacks Rank #3. The company is expected to release earnings on May 4.

Southwestern Energy Company SWN has an Earnings ESP of +11.77% and a Zacks Rank #3. The company is expected to release earnings on Apr 27.

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