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Why Nuverra Environmental Services Shares Plunged

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 Nuverra Environmental Solutions (NASDAQOTH: NESC  ) were freezing up today, falling as much as 13% after issuing preliminary second-quarter results.

So what: Nuverra, which specializes in the collection and recycling of substances such as waste water for fracking companies and others, said it expects revenue for the quarter to come in at $165.5 million, blaming lower than expected activity levels in its shale solutions segment, bad weather in the Bakken area, and unspecified operational issues in the Eagle Ford area. The company formerly known as Heckmann even cited heavy demand in the Marcellus and Utica shales as a problem since it forced the company to hire subcontractors, which lowered overall margins.

Now what: For a company that once seemed to hold so much promise in the fracking boom, Nuverra continues to disappoint. It's missed earnings estimates three quarters in a row and figures to do so again after significantly lowering its sales forecast. Shares are near an all-time low after today's news, and it's easy to see why. There are reasons to be optimistic about Nuverra, including sequential revenue growth in the Bakken, but this company needs to deliver on the bottom line first. We'll learn more when its full earnings report comes out Aug. 8. Analysts have been expecting a profit of a penny per share.

Nuverra may be struggling, but don't think there aren't any smart plays in the fracking boom. Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza". Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Read/Post Comments (3) | Recommend This Article (9)

Comments from our Foolish Readers

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  • Report this Comment On July 31, 2013, at 12:18 PM, Teacherman1 wrote:

    Looks like a good buying opportunity to me.

    Will take a while, but I expect it to double or triple over time.

    JMO and worth exactly what I am charging for it.

  • Report this Comment On July 31, 2013, at 6:48 PM, dggopal wrote:

    yeah I have been tracking this stock for a while too... I'm just wondering it it wouldn't be better to wait until after earnings to get a better price.... decisions decisions

  • Report this Comment On August 01, 2013, at 12:48 PM, ifaustimus wrote:

    This company is well positioned for an uptick. We just have to wait for the political position to change. What a concept!

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8/23/2016 11:56 AM
NESC $0.25 Up +0.03 +11.36%
Nuverra Environmen… CAPS Rating: ***