A month has gone by since the last earnings report for Cactus, Inc. (WHD Quick QuoteWHD - Free Report) . Shares have lost about 3.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cactus due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cactus Q2 Earnings and Revenues Beat Estimates

Cactus, Inc.  reported second-quarter 2024 adjusted earnings of 81 cents per share, which beat the Zacks Consensus Estimate of 70 cents. However, the bottom line declined from the year-ago quarter’s 84 cents.

Total quarterly revenues of $290 million beat the Zacks Consensus Estimate of $275 million. The top line also declined from the year-ago quarter’s figure of $306 million.

The better-than-expected quarterly results can be attributed to increased customer drilling efficiency. This was partially offset by lower contributions from both segments. 

Business Segments

Following the closure of the FlexSteel acquisition, Cactus reported under two business segments — Pressure Control and Spoolable Technologies.

WHD generated revenues of $187.2 million from the Pressure Control segment, down from $199.1 million reported in the year-ago quarter. The segment was aided by increased customer drilling efficiency and production equipment shipments to a large customer. This was partially offset by lower industry activity and softer U.S. land rig count through the quarter. The top line was above our estimate of $175 million.

Adjusted Segment EBITDA for Pressure Control totaled $65.3 million, down from almost $74.1 million in the prior-year quarter. The reported figure was above our estimate of $58.7 million.

Revenues from the Spoolable Technologies segment came in at $103.7 million, down from $106.7 million in the prior-year quarter. The figure was above our estimate of $100.4 million.

Adjusted Segment EBITDA for the unit totaled $42.5 million, down from $45.5 million in the prior-year quarter. The figure was above our estimate of $35.9 million.

Capex and Cash Flow

Cactus’ capital expenditure and other amount for the quarter totaled $7.2 million. Operating cash flow amounted to $78 million.

Balance Sheet

Cactus had cash and cash equivalents of $246.5 million at the end of the second quarter of 2024. The company had no bank debt outstanding as of Jun 30, 2024.

Outlook

Cactus expects relatively stable U.S. land activity levels in the third quarter of 2024. However, in the Pressure Control sector, WHD anticipates revenues to be moderate following the lower average drilling activity levels this year and less visibility into production equipment awards. Additionally, from Spoolable Technologies, Cactus expects revenues to be flat to slightly down from the second quarter, reflecting the timing of international shipments.

It expects net capital expenditures to be in the band of $35-$45 million for full-year 2024, down from the previously guided range of $45-$55 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, Cactus has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cactus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.