Please ensure Javascript is enabled for purposes of website accessibility

Here’s What Fueled C&J Energy Services, Ltd. Stock's 39.8% Crash in August

By Matthew DiLallo - Sep 1, 2015 at 12:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings, analysts and oil … oh my! C&J Energy Services, Ltd. Stock didn’t stand a chance in August.

What: August was an abysmal month for C&J Energy Services, Ltd. (NYSE: CJES) investors as the stock crashed nearly 40% last month. Fueling the fallout was a trifecta of bad news as earnings, analysts, and oil all contributed to the drop.

So what: C&J Energy Service started the month on the wrong foot as it reported less-than-stellar second-quarter results on Aug. 5. While the company beat the consensus earnings estimate by $0.10 per share that was of little comfort as it still lost $0.46 per share. Meanwhile, revenue only came in at $511.2 million, which was nearly $50 million less than analysts were expecting. On top of that, its outlook wasn't very encouraging as it said that market remains "difficult" and the duration remains "uncertain." As the chart below shows, this started the company's downward slide.

CJES Chart

CJES data by YCharts

Making matters worse was that the price of oil continued to slide as the month wore on as crude was down double digits at one point sparking worries that oil and gas activity levels won't improve any time soon. It was this concern that led SunTrust to downgrade the stock from Buy to Neutral while also cutting its price target cut from $11 to $4. That downgrade, which hit the market on Aug. 24, really sent shares into a free fall. However, it is worth noting that the downgrade seemed to be at the very bottom as the stock surged at the end of the month largely due to the fact that the price of oil rebounded sharply and actually ended the month higher.

Now what: C&J Energy Services stock will likely to continue to be volatile until the energy market settles down. That could take a while as activity levels are still in the process of finding a bottom. Right now industry needs a higher oil price before producers will increase investments to grow production. This increase is what is needed to push activity levels higher and thereby improve C&J Energy Services' business prospects.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SunTrust Banks, Inc. Stock Quote
SunTrust Banks, Inc.
STI

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.