Why Core Laboratories N.V. Shares Got Crushed

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 Core Laboratories (NYSE: CLB  ) plunged 18% today after the energy services provider lowered its current-quarter and full-year guidance.

So what: The stock pulled back sharply in April on disappointing first-quarter results, and today's second-quarter guidance cut -- $1.32-$1.35 in earnings per share on revenue of $265 million-$270 million versus its prior view for $1.48-$1.53 and $280 million-$286 million -- implies that the headwinds working against Core are only getting stronger. On the bright side, management said the warning is due to a drop in demand and not a loss in market share for targeted core analyses jobs, suggesting that Core's competitive position remains strong.  

Now what: Due to the weak current quarter, management now sees full-year EPS of $5.80 to $6 on revenue of $1.1 billion, down from its prior view of $6-$6.25 and $1.155 billion-$1.175 billion, respectively. "The lowered second quarter 2014 revenue and EPS guidance are primarily caused by North American clients that now project sampling and analyzing less than previously expected levels of reservoir fluids from established unconventional plays in the Marcellus, Bakken, Montney, [Niobrara] and Eagle Ford formations," wrote Core Labs. "A reduction in the number and length of cores cut and analyzed from these reservoirs also is causing the decrease in the Company's expected revenue and EPS in the second quarter of 2014." With the stock now now off about 30% from its 52-week high, however, those short-term concerns might be providing patient Fools with a high-quality long-term opportunity.

3 stock picks to ride America's energy bonanza
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 look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

 


Read/Post Comments (0) | Recommend This Article (4)

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.

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: 2953651, ~/Articles/ArticleHandler.aspx, 9/21/2014 4:40:03 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...


Advertisement