Why Basic Energy Services, Inc Dropped Today

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 oil and gas industry service company Basic Energy Services, Inc (NYSE: BAS  ) fell as much as 12% after reporting earnings.

So what: Revenue was up 9%, to $359.7, and swung from a $4.2 million loss a year ago to a $2.4 million, or $0.06 per share, profit. Revenue topped the $357.4 million estimate from Wall Street, and adjusted earnings of $0.13, which exclude one-time items, were $0.04 better than estimates. The drop was strange given the solid results, but investors had clearly set their expectations even higher.

Now what: Demand for Basic Energy Services was up across the board, as oil and gas prices remained relatively high. The Permian Basin continues to be a strong point and, with drilling expanding there, it should be for the foreseeable future. Right now, the value is what's concerning because the company is barely back to profitability; but if momentum picks up, this could be a good value for investors.

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