Oceaneering International, Inc. OII is set to report third-quarter earnings on Oct. 23, after the closing bell. The Zacks Consensus Estimate for earnings is pegged at 44 cents per share and that for revenues is pinned at $673.97 million.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Let us delve into the factors that are likely to have influenced OII’s performance in the to-be-reported quarter. Before that, it is worth taking a look at the company’s performance in the last reported quarter.
Highlights of Q2 Earnings
In the last reported quarter, Houston, TX-based, oil and gas equipment and services company’s earnings missed the consensus mark. OII reported an adjusted profit of 28 cents per share, which was 9 cents lower than the Zacks Consensus Estimate. This was due to lower-than-expected operating income from the company’s Offshore Projects Group, Integrity Management & Digital Solutions, and Aerospace and Defense Technologies segments. However, revenues of $668.8 million beat the Zacks Consensus Estimate by 0.6%.
OII’s earnings beat the Zacks Consensus Estimate in one of the trailing four quarters and missed the mark thrice, delivering an average negative surprise of 13.58%.
This is depicted in the graph below:
Oceaneering International, Inc. Price and EPS Surprise
Oceaneering International, Inc. price-eps-surprise | Oceaneering International, Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for third-quarter 2024 earnings has not witnessed any movement in the past seven days. The estimated figure indicates a 15.79% year-over-year increase. The Zacks Consensus Estimate for revenues implies an increase of 6.11% from the year-ago period’s actual.
Factors to Consider
We expect that OII’s revenues are likely to have improved in the quarter to be reported. Oceaneering’s revenues are primarily driven by demand for its services and products from the offshore energy industry, particularly in areas with deepwater exploration and production activities. Additionally, the company serves other industries, such as defense and aerospace, diversifying its revenue streams.
Our model predicts third-quarter revenues to have increased to $674 million from last quarter’s $668.8 million. This anticipated growth can be attributed to the robust performance of the energy services and products segments, including the Offshore Projects Group and Total Energy Services and Products segments. Based on our model estimates, we expect the Offshore Projects Group to have grown 2.1%, while the Total Energy Services and Products segment is likely to have surged 79.2% from the last quarter’s levels.
A key strength for Oceaneering lies in its strong relationships with well-capitalized, blue-chip exploration and production companies. These clients typically have long-term production growth plans, which provide revenue visibility and business stability. As these companies are less susceptible to short-term commodity price fluctuations, Oceaneering is likely to have benefited from its earnings stability.
Demand for Oceaneering’s services is expected to have remained robust, driven by continued offshore energy exploration and production activities. Rising global energy consumption and the shift toward cleaner energy sources have been key contributing factors. Furthermore, the company’s reliance on long-term contracts is expected to have insulated it from short-term market volatility, offering a more stable revenue stream and minimizing exposure to pricing swings.
On the other hand, the deterioration in OII’s costs is expected to have positively impacted its bottom-line performance. The company’s cost of services and products is projected to have reached $526.5 million in the third quarter, which is 4% down from last quarter’s $548.6 million.
What Does Our Model Predict?
Our proven model predicts an earnings beat for Oceaneering this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is exactly the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is +2.27%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: OII currently carries a Zacks Rank #3.
Other Stocks to Consider
Here are some other firms from the energy space that you may want to consider, as these, too, have the right combination of elements to post an earnings beat in this season.
Cheniere Energy, Inc. LNG has an Earnings ESP of +2.27% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The firm is scheduled to release earnings on Oct. 31. LNG’s earnings beat the Zacks Consensus Estimate in two of the last four quarters and missed the other two, delivering an average surprise of 55.86%. Valued at around $41.31 billion, LNG has gained 3.8% in a year.
Canadian Natural Resources Limited CNQ has an Earnings ESP of +2.51% and a Zacks Rank #3 at present. The firm is scheduled to release earnings on Oct. 31.
CNQ’s earnings beat the Zacks Consensus Estimate in four of the last four quarters, delivering an average surprise of 7.16%. Calgary-based CNQ is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas.
CNX Resources Corporation CNX has an Earnings ESP of +4.7% and a Zacks Rank #3 at present. The firm is scheduled to release earnings on Oct. 24.
CNX is an independent oil and gas exploration and production company formed after the separation of CONSOL’s Exploration and Production and Pennsylvania Mining Operations into two independent companies.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 5 Stocks Set to Double. Click to get this free report
CNX Resources Corporation. (CNX) : Free Stock Analysis Report
Oceaneering International, Inc. (OII) : Free Stock Analysis Report
Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
