Heckmann Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Heckmann (NYSE: NES  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Plenty of companies have taken advantage of the boom in oil and natural gas drilling recently, but Heckmann has taken an unusual angle toward unearthing riches from the natural resources industry. Let's take an early look at what's been happening with Heckmann over the past quarter, and what we're likely to see in its quarterly report on Monday.

Stats on Heckmann

 

 

Analyst EPS Estimate

($0.02)

Year-Ago EPS

$0.03

Revenue Estimate

$105.6 million

Change From Year-Ago Revenue

104%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will Heckmann clean up this quarter?
Analysts have been pretty solid in their views toward Heckmann over the past few months, holding their consensus earnings estimates for the just-ended quarter steady, and cutting just a single penny from their full-year 2013 earnings-per-share calls. But the stock has struggled, falling 7% since early December, despite the broader market's run toward new highs.

Heckmann has found an unusual way to make money from new unconventional drilling techniques. It has developed a specialty in helping oil and gas exploration and production companies transport, treat, and dispose of the water and other fluids that they use in hydraulic fracturing operations. Given the need for oil and gas companies to maintain good relations with the communities where they drill, Heckmann has benefited from their attention to waste and water disposal, attracting a stable of well-known energy-company clients that includes Chesapeake Energy and EOG Resources.

But, increasingly, companies are looking to create their own in-house water solutions. As Fool contributor Matt DiLallo recently discovered, CONSOL Energy (NYSE: CNX  ) has its own subsidiary to handle water treatment from its mines and drilling operations, and is investing substantial amounts of money to expand its treatment capacity. Devon Energy (NYSE: DVN  ) has a similar facility that has enabled it to reuse water repeatedly, saving hundreds of millions of gallons of water. Even relatively small player Rex Energy (NASDAQ: REXX  ) has seen the value of an in-house operation, owning an 80% stake in a company that handles its wastewater.

Still, Heckmann is investing in its future, having bought privately held Power Fuels. The buyout gives Heckmann more exposure to the lucrative Bakken shale play, and should boost earnings per share immediately.

In its quarterly report, watch for news on how the integration of the Power Fuels acquisition is proceeding, as well as any commentary that the company makes on regulatory activities across the nation. Obviously, if regulators ever clamp down on hydraulic fracturing, then Heckmann will face a serious crisis.

Despite Heckmann's appeal, energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand new premium report on the company. Simply click here now to access your copy.

Click here to add Heckmann to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


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