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Can Noble Corp. (NE) Deliver a Beat this Earnings Season?

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Noble Corporation plc (NE - Free Report) is expected to report second-quarter 2017 earnings results around Aug 3, after the market closes.

Last quarter, the company delivered a positive earnings surprise of 10.53%. In the last four quarters, Noble Corp. had an average negative surprise of 15.36%. Let’s see how things are shaping up for this announcement.

Noble Corporation Price and EPS Surprise

 

Noble Corporation Price and EPS Surprise | Noble Corporation Quote

Earnings Whispers

Our proven model shows that Noble Corp. is likely to beat on earnings this time because it has the right combination of two key ingredients.  

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +6.06%. This is because the Most Accurate estimate stands at a loss of 31 cents, while the Zacks Consensus Estimate is pegged at a loss of 33 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Noble Corp. carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings. The combination of Noble Corp.’s favorable Zacks Rank and a positive Earnings ESP makes us confident about an earnings beat.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.  

Factors Likely to Influence this Quarter

Noble Corp. is a leading offshore drilling firm with a robust portfolio of assets. Though the industry has witnessed a setback in the past few months, the company is likely to be less impacted by it than its peers. This is because Noble Corp. enjoys a strong backlog position ($3.5 billion).

Moreover, Noble Corp. has been able to significantly reduce expenses related to oil and gas production activities during first quarter of 2017. The success on this front reflects the company’s consistent efficiency gains and cost-reduction initiatives and should prove favorable for the second-quarter earnings.

The company’s price chart is unimpressive. Shares of the company underperformed the industry, year to date. While Noble Corp.’s shares have lost 31.7%, the broader market indices declined 20% during the aforesaid period.

However, the offshore drilling industry is witnessing rig oversupply. This is a cause for concern for the likes of Noble Corp. as an increase in rig count may hamper contract flow and dayrates. In addition, major oil companies are lowering deep-water capital spending, thereby worsening the situation.

Other Stocks to Consider

Here are other firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter:

Global Partners LP (GLP - Free Report) has an Earnings ESP of + 60.00% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

Boardwalk Pipeline Partners LP has an Earnings ESP of +6.90% and carries a Zacks Rank #2.

The Williams Companies Inc (WMB - Free Report) has an Earnings ESP of + 50.00% and carries a Zacks Rank #3.

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