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Why Shares of Key Energy Services Dropped

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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 15% today after the company reported earnings.

So what: First quarter revenue fell 12% from a year earlier, to $428.4 million, falling short of the $443.8 million estimate from Wall Street. Earnings per share were just $0.01, which was $0.02 worse than estimates, driven by a falling inland rig count. 

Now what: This is a theme we've seen over and over again during the past two quarters. Service providers are suffering from weak demand despite record production, because drillers are becoming more efficient in their activities. Management does think activity will pick up as the year goes on, but I can't be a buyer, with revenue falling as fast as it did in the first quarter.

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

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  • Report this Comment On May 05, 2013, at 9:57 PM, lanceim59 wrote:

    Of course you're not going to be a buyer of KEG. Typical wrong Motley Fool advice. Insiders have been buying KEG over the past few weeks and none of them have been selling for the past month. I think I'll side with the insiders on this one.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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Key Energy Service… CAPS Rating: ***