Unit Earnings Preview

Unit (NYSE: UNT  ) hasn't been able to establish an earnings trend, bouncing between beating and falling short of estimates during the past fiscal year. The company will unveil its latest earnings Tuesday. Unit is engaged in the land contract drilling of natural gas and oil wells; the exploration, development, acquisition and production of oil and natural gas properties; and the buying, selling, gathering, processing, and treating of natural gas.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Unit, with five of seven rating it a buy and the remainder rating it a hold. Analysts like Unit better than competitor Atwood Oceanics overall. Wall Street has warmed to the stock over the past three months, with analysts increasing their endorsement from hold to moderate buy.
  • Revenue forecasts: On average, analysts predict $265.7 million in revenue this quarter. That would represent a rise of 29.9% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.94 per share. Estimates range from $0.87 to $1.01.

What our community says:
CAPS All-Stars are solidly backing the stock with 99.4% assigning it an "outperform" rating. The community at large concurs with the All-Stars with 98.9% giving it a rating of "outperform." Fools are bullish on Unit and haven't been shy with their opinions lately, logging 349 posts in the past 30 days. Unit has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Unit's profit has risen year over year by an average of 19.2%. The company upped its gross margin by 2.2 percentage points in the last quarter. Revenue rose 19.8% while cost of sales rose 14.2% to $112.7 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

54.5%

55.2%

52.7%

51.5%

Operating Margin

26.9%

28.0%

25.6%

25.5%

Net Margin

16.6%

17.3%

15.8%

15.7%

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