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What: Shares of Basic Energy Services
So what: Second quarter revenue of $296.9 million topped estimates of $286.9 million, but earnings per share of $0.45 fell two cents short of estimates. Investors were concerned that management thinks margins won’t expand beyond 40%-45% on labor and operating costs.
Now what: Management also said it would look for acquisitions in the $10 million-$30 million range and had multiple deals in final stages. Demand is outpacing supply and Basic wants to capitalize by making acquisitions, which should help earnings in the future. I see today’s drop as an opportunity to get shares at a discount after a quarter that only missed expectations by a couple of cents.
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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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