Will Noble Corp. (NE) Miss This Earnings Season? - Analyst Blog

Leading contract drilling company, Noble Corporation NE is set to report its first-quarter 2014 results on Apr 16. Let's see how things are shaping up prior to the announcement.

In the last quarter, the company's earnings of 82 cents per share increased 64% year over year from 50 cents. However, the results missed by a penny the Zacks Consensus Estimate of 83 cents.

Growth Factors this Past Quarter

Noble has 73% of all rig days committed for 2014, including 78% of floating rig days and 75% of jackup rig days. For 2015, 44% of the rig days are booked, comprising 61% of the floater time and 38% of the jackup rig days.
 
Overall total backlog at the end of the fourth quarter was approximately $15.4 billion versus $16.2 billion on Sep 30, 2013. The sequential decline partly reflects the change in the quantum of contracts. The falling trend is also influenced by more strict regulatory requirements, especially in the U.S. Gulf of Mexico, and changing customer expectations.

On the other hand we expect the deepwater market segment to deliver strong growth in the foreseeable future. With Noble's substantial backlog position ($15.4 billion), its earnings and cash flow visibility are likely to be insulated from the downward trend in the near-to-medium term.
 
However, Noble remains highly leveraged to the North Sea, where tax regime changes could have a significant impact on future demand. Moreover, its high dependence on certain customers may also pose a risk.

Earnings Whispers?

Our proven model does not conclusively show that Noble is likely to beat earnings this quarter because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for that to happen. It is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Noble is 0.00% since the Most Accurate Estimate stands at 69 cents, in line with the Zacks Consensus Estimate.

Zacks Rank #3 (Hold): Noble's Zacks Rank #3 has little effect on the predictive power of ESP because the Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

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

Helmerich & Payne Inc. HP, earnings ESP of +3.43% and a Zacks Rank #1 (Strong Buy).
 
Pioneer Energy Services Corp. PES, earnings ESP of +33.33% and a Zacks Rank #2 (Buy).

Precision Drilling Corp. PDS , earnings ESP of +6.06% and a Zacks Rank #2 (Buy).