Why Key Energy Services' Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Key Energy Services (NYSE: KEG  ) fell as much as 19.5% today after the company lowered second-quarter guidance.

So what: Key said that revenue was expected to grow 5% to 7% compared to the first quarter, down from a previous expectation of 10% to 15% growth. Earnings from continuing operations are now expected to be $0.18 to $0.20 from a previous expectation of $0.31 to $0.33.

Now what: Lower activity in the natural gas market was blamed for the lowered expectations, which will affect the fluid management, coiled tubing, and rental services businesses. The rig services business is expected to do well as liquids production in the U.S. remains high. Estimates will probably need to come down for 2012, but it looks like the stock has already priced in some bad news. Shares trade at just 5.9 times the current estimates, and even if they're lowered some, the stock is reasonably priced.

I think long-term activity will pick up in both natural gas and liquids and the stock will move higher from this latest low.

Interested in more info on Key Energy Services? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1920514, ~/Articles/ArticleHandler.aspx, 10/27/2016 6:31:34 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,169.68 -29.65 -0.16%
S&P 500 2,133.04 -6.39 -0.30%
NASD 5,215.97 -34.29 -0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/27/2016 3:56 PM
KEGXQ $0.07 Down +0.00 -1.41%
Key Energy Service… CAPS Rating: **