Why Is Liberty Oilfield Services Down 8.1% Since Last Earnings Report?

It has been about a month since the last earnings report for Liberty Oilfield Services LBRT. Shares have lost about 8.1% in that time frame, underperforming the S&P 500.

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

Liberty Energy Q2 Earnings Top Estimates, Revenues Lag

Liberty Energy reported a second-quarter 2024 adjusted net income of 61 cents per share, which marginally beat the Zacks Consensus Estimate of 60 cents. The Denver-CO-based oil and gas equipment company's outperformance reflects the impact of strong execution and enhanced fleet utilization. However, the bottom line underperformed the year-ago quarter's reported figure of 87 cents due to a year-over-year increase in costs and expenses.

Revenues totaled $1.16 billion, which missed the Zacks Consensus Estimate by 1.12%. The top line was below the prior-year quarter's level of $1.2 billion by 3.3%.

The company's adjusted EBITDA was $273.3 million compared with $311.5 million in the year-ago quarter. However, the figure beat our projection of $255.3 million.

Ahead of the earnings release, Liberty's board of directors announced a cash dividend of 7 cents per common share, payable on Sep 20, 2024, to its stockholders of record as of Sep 6. As part of its shareholder return policy, LBRT repurchased shares worth $30 million at an average price of $20.39 per share in the reported quarter. The company returned $41 million to its shareholders through share repurchases and cash dividends.

Liberty achieved the highest diesel displacement in its history with natural gas-powered digiFleets and set a record for gas substitution in dual fuel technologies. The company expanded the Liberty Power Innovations ("LPI") portfolio by launching operations in the DJ Basin, including new compression capacity and logistics assets. LBRT also achieved its first CNG sales, supporting Liberty fleets and customer drilling rigs in June.

Costs and Expenses

Liberty reported total costs and expenses of $1018.1 million in the second quarter, an increase of 3% from the year-ago quarter's level. However, the figure was also lower than our projection of $1,045.7 million.

Balance Sheet & Capital Expenditure

As of Jun 30, Liberty had approximately $30 million in cash and cash equivalents. The pressure pumper's long-term debt of $147 million represented a debt-to-capitalization of 7.1%. Further, the company's liquidity — cash balance plus revolving credit facility — amounted to $271 million.

In the reported quarter, LBRT spent $134.1 million on its capital program, higher than our projection of $127.2 million.

Guidance

Despite recent price fluctuations, the company remains optimistic about the long-term prospects of the global oil and gas market.

LBRT anticipates a slight decline in overall North American completion activity in the second half of the year due to front-loading spending by some operators. However, the company expects financial performance to remain consistent with the first half.

Although the pace of fracking activity has slowed slightly, Liberty believes that demand for quality frac crews will tighten in 2025 as oil and gas production increases. The company's focus on innovation and efficiency, combined with its strong supply chain, positions LBRT well to capitalize on these market trends.

Liberty's strategic partnerships with E&P operators and its commitment to delivering superior performance and technical solutions solidify the company's competitive advantage in the industry. LBRT plans to continue investing in competitive advantages, generate strong cash flow and return value to its shareholders.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -6.06% due to these changes.

VGM Scores

At this time, Liberty Oilfield Services has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. It's no surprise Liberty Oilfield Services has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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