Core Laboratories Inc. CLB is set to release third-quarter earnings on Oct. 23, after the closing bell. The Zacks Consensus Estimate for profit in the to-be-reported quarter is pegged at 25 cents per share on revenues of $132.71 million.

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Let us delve into the factors that might have influenced CLB’s performance in the quarter under review. 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, the Houston, TX-based oil and gas equipment and services company’s adjusted earnings beat the consensus mark. CLB reported adjusted earnings of 22 cents per share, which was 5 cents higher than the Zacks Consensus Estimate. This was due to robust performance from the Reservoir Description segment. Revenues of $130.6 million also beat the Zacks Consensus Estimate by 1.4%.

CLB’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 3.54%.

This is depicted in the graph below: 

Trend in Estimate Revision for CLB Stock

The Zacks Consensus Estimate for third-quarter 2024 earnings has remained unchanged in the past 30 days. The estimated figure indicates a 13.64% year-over-year increase. The Zacks Consensus Estimate for revenues indicates an increase of 5.88% from the year-ago period’s reported actuals.
 

Factors to Consider

The company primarily makes money through its reservoir description and production enhancement services, which analyze and optimize oil and gas extraction processes.

Our model predicts third-quarter revenues to increase to $133.1 million from the last quarter's level of $130.6 million. This anticipated growth can be attributed to the strong performance of the Reservoir Description segment, which is likely to have continued to benefit from growing demand for global rock and fluid laboratory analysis. We expect the segment’s third-quarter revenues to have risen to $88 million from $86.3 million in the prior quarter.

Operating income is projected to remain robust, reflecting effective cost management and a strategic focus on high-margin services. This should support overall profitability, positioning the company to achieve better results compared with the prior quarter. CLB’s disciplined approach to operational efficiency is likely to have played a key role here.

On the other hand, the decline in costs is expected to have positively improved its bottom-line performance. The company’s costs of services and product sales are projected to have reached $102.4 million in the third quarter, which is lower than the last quarter's level. Its general and administrative expenses are expected to have decreased from $10.3 million to $9.9 million in the same time frame.

The company’s strategic use of digital technologies is also likely to have contributed to improved performance. By replacing hardware with software solutions and reducing on-site personnel, CLB is expected to have streamlined operations, resulting in lower costs and capital investments. This shift toward automated data flow between field locations and back-office systems is likely to have supported expanded margins.
 

What Our Proven Model Predicts for CLB

Our proven model predicts an earnings beat for Core Laboratories this earnings 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 +2.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:  CLB 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 this reporting cycle.

Cheniere Energy, Inc. LNG has an Earnings ESP of +2.27% and a Zacks Rank #1 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 trailing four quarters and missed the other two, delivering an average surprise of 55.86%. Valued at around $41.59 billion, LNG has gained 5% in a year.

Targa Resources Corp. TRGP has an Earnings ESP of +8.82% and a Zacks Rank #2 at present. The firm is scheduled to release earnings on Nov. 5.

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Core Laboratories Inc. (CLB) : Free Stock Analysis Report

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