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What’s in the Cards for U.S. Silica (SLCA) in Q1 Earnings?


U.S. Silica Holdings, Inc. SLCA is set to release first-quarter 2017 results after the closing bell on Apr 24.

Last quarter, the company posted a loss of 9 cents per share compared to a net loss of 29 cents in the prior-year quarter. However, the loss was narrower than the Zacks Consensus Estimate of a loss of 10 cents.

The company’s net sales were $182.4 million, up 34% from the year ago quarter. Revenues beat the Zacks Consensus Estimate of $174 million.

U.S. Silica surpassed the Zacks Consensus Estimate in all of the trailing four quarters with an average positive surprise of 24.95%.

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

U.S. Silica Holdings, Inc. Price and EPS Surprise

U.S. Silica Holdings, Inc. Price and EPS Surprise | U.S. Silica Holdings, Inc. Quote

Factors at Play

U.S. Silica, in its fourth-quarter call, said that despite many challenges it was able to make substantial progress due to a leaner, stronger, flexible as well as a customer-focused business model. Looking ahead, the company expects strong demand for sand proppant and last mile logistics in Oil and Gas business. The company is well-positioned to capitalize on favorable market trends.

U.S. Silica expects demand for the Industrial segment, which occupies most of the end-user market of the company, to remain strong this fiscal. According to the President and CEO, Bryan Shinn, the company expects to continue to roll out new products and drive bottom-line growth on the back of higher margin products.

U.S. Silica’s healthy balance sheet provides it with ample opportunities for strategic investments, ensuring long-term competitive position in the market. The company’s decision to raise capital and execute cost improvement projects through its supply chain enhanced its financial flexibility and reinforced the balance sheet.

U.S. Silica reported $711.2 million cash and cash equivalents at the end of fourth quarter 2016, which witnessed an astounding increase of 137.8% year-over-year compared to same year-ago quarter.

As part of its investment strategy, U.S. Silica purchased the NBR Sand unit of New Birmingham Inc., a privately-owned industrial minerals and logistics company which allows the company to expand its product offering and capacity in the regional sands market, and enhance customer satisfaction. The company is optimistic about the growth of the regional sand market and is looking to create a strong foothold in the same.

U.S. Silica has also acquired logistics solutions provider, Sandbox Enterprises LLC. This acquisition will allow the company to offer its customers significantly improved transportation and operating efficiencies and meaningful cost savings relative to the existing delivery systems. The acquisition is also expected to deliver earnings accretion between 20 cents and 30 cents per share in 2017.

U.S. Silica’s shares declined 25.3% in the last three months, underperforming the Zacks categorized Mining-Miscellaneous industry’s fall of 12.6%.

Earnings Whispers

Our proven model does not conclusively show that U.S. Silica is likely to beat the Zacks Consensus Estimate 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. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for U.S. Silica is currently pegged at -16.67%. This is because the Most Accurate estimate is 5 cents and the Zacks Consensus Estimate is 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: U.S. Silica currently sports a Zacks Rank #1, which when combined with a negative ESP, makes surprise prediction difficult.

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

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter:

The Chemours Company CC has an Earnings ESP of +4.08% and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks Rank #1 stocks here.

Cliffs Natural Resources Inc. CLF has an Earnings ESP of +35.29% and carries a Zacks Rank #3.

Franco-Nevada Corporation FNV has an Earnings ESP of +15% and carries a Zacks Rank #3.

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