On Wednesday, Heckmann (HEK +0.00%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
Heckmann has found a unique way to take advantage of the boom in oil and gas drilling in the U.S. over the past several years. Rather than producing energy itself, Heckmann specializes in environmental services to energy customers, particularly delivering water and necessary chemicals for hydraulic fracturing and handling waste disposal. Let's take an early look at what's been happening with Heckmann over the past quarter and what we're likely to see in its quarterly report.
Stats on Heckmann
|
Analyst EPS Estimate |
($0.01) |
|
Year-Ago EPS |
($0.03) |
|
Revenue Estimate |
$166.88 million |
|
Change From Year-Ago Revenue |
204% |
|
Earnings Beats in Past 4 Quarters |
1 |
Source: Yahoo! Finance.
Will Heckmann bounce back this quarter?
Analysts have gotten gloomier about Heckmann's earnings prospects recently, reversing previous expectations for a profitable first quarter and slashing their full-year 2013 estimates by more than half. The stock's response has been somewhat more muted, but it's still down 4% since late January.
The biggest news of the quarter for Heckmann came in its fourth-quarter-earnings report in March, when the company announced its intent to change its name to Nuverra Energy Solutions. With the name change, founder Dick Heckmann and his management team hope to give customers and investors a better sense of what Heckmann does by unifying its multiple brands under one name. Another benefit will be that Nuverra will paint a more positive image against regulators trying to clamp down on fracking.
Yet longer-term, the advantage that Heckmann has comes from its operational success. Rival Crosstex Energy (NASDAQ: XTEX) and oil and gas producer SandRidge Energy (NYSE: SD) have taken a different tack with the problem of what to do with wastewater and other materials from drilling, building infrastructure designed solely to dispose of the liquids. Heckmann's emphasis on recycling, by contrast, requires far less water and helps its customers prove that they're more environmentally conscious of the impacts of their drilling activity.
Moreover, concerns that Heckmann's future is too tied to natural gas are largely exaggerated. With recent acquisitions, the company has broadened its reach into oil and gas-liquids development, capitalizing on the need for its services from all types of energy production.
In Heckmann's report, see if the company starts to look more seriously at international expansion. Given the huge rise in fracking around the world, Heckmann has huge potential if it can better leverage its expertise not just domestically but globally.
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