On Thursday, March 16th, 2023, Calfrac Well Services (TSE:CFW) announced its first-quarter earnings report. The results were met with surprise as the company’s C$0.17 earnings per share missed the consensus estimate by a significant C($0.26), totaling a decrease of almost 65%. The company’s net margin rested at only 0.78%, demonstrating a lack of efficiency in generating profit for investors. Meanwhile, the return on equity was 9.39%, indicating that every dollar invested produced approximately nine cents of additional earnings.
Additionally, Calfrac Well Services earned C$447.85 million in revenue during the quarter, lagging behind the consensus estimate of C$461.25 million by roughly 3%. Although this amount is not negligible considering the magnitude of revenues generated by large corporations, such as Calfrac Well Services, it implies that there were not enough business activities to support analysts’ expectations.
Investors and shareholders might want to monitor whether this lackluster quarterly performance is an anomaly or reflective of more severe underlying issues within the organization itself or perhaps global market conditions that adversely altered market demand for Calfrac Well Services.
This outcome contrasts with previous periods when Calfrac performed well above market expectations returning high profits and achieving consistent growth metrics fueled by robust management and strong operational performances globally.
Calfrac Well Services operates in numerous industries such as oil and gas exploration and drilling industries, where macroeconomic forces can significantly affect quarter-to-quarter rebounds besides geopolitical tensions and regulatory pressures that have a bearing on investors’ sentiment towards such low margin businesses.
In short, despite this disappointing release news from Calfrac Well Services’s Q1 results would require watching over successive quarters to ascertain whether there exists long-term structural weakness or poor execution within its operations or if external environmental factors are affecting its growth trajectory detrimental to investor wealth creation in line with declaring lofty dividend yields.
Calfrac Well Services Receives Boost to FY2023 EPS Estimates from Stifel Firstegy
As of May 13, 2023, Calfrac Well Services Ltd. (TSE:CFW) has received a boost to their FY2023 EPS estimates from Stifel Firstegy. The research report issued on Tuesday, May 9th forecasts that the company will post earnings per share of $1.53 for the year, up from their previous estimate of $1.49. This report follows several other reports from brokerages that have also been issued on CFW.
Despite recent price target decreases from some firms such as Stifel Nicolaus and Royal Bank of Canada, three investment analysts have rated the stock as a hold rating and three have issued a buy rating to the company’s stock. This indicates a moderate buy consensus among those analyzing the stock.
Calfrac Well Services Ltd., along with its subsidiaries, provides specialized oilfield services in Canada, the United States, and Argentina with offerings ranging from hydraulic fracturing to cementing and pressure pumping services to oil and natural gas industries.
The boost in EPS estimates for CFW is notable and may be an indicator of potential growth for the company in FY2023 and beyond. However, it is important to consider all factors before making any investment decisions. Analyst ratings and price targets can change rapidly based on market conditions or unexpected news events related to the company or industry at large.
Investors looking to add Calfrac Well Services to their portfolio should do their own due diligence prior to making any trades involving CFW stock. Consider consulting with a financial advisor to help weigh risks against potential rewards when analyzing this or any other investment opportunity.