low angle photograph of black metal tower satellite during daytime

Cactus Q3 Earnings: Time To Buy Struggling NYSE:WHD Stock?

in EARNINGS/INVESTING IDEAS by

Cactus, Inc. (NYSE:WHD) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.01/share on revenue of $55.369 million. The consensus earnings per share (EPS) of $0.01/share is based on a poll of 11 analysts and represents a decline in eps of −96.9% over the same quarter last year, when the company reported earnings of $0.48/share.

The revenue forecast of $55.369 million based on a poll of 7 analysts implies a year-over-year (YoY) decline in revenue of −65.6%. Last year the company reported $160.8 million in revenue for the quarter.

Expected to report EPS contraction of −96.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $55.37 $160.81 −65.6%
EPS $0.01 $0.48 −96.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and met expectations 1 quarter.

What are your expectations from Cactus, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.02 $0.10 754.5% Beat
Q1, 2020 $0.35 $0.41 18.8% Beat
Q4, 2019 $0.35 $0.37 5.6% Beat
Q3, 2019 $0.45 $0.48 6.1% Beat
Q2, 2019 $0.51 $0.52 2.8% Beat
Q1, 2019 $0.47 $0.49 3.3% Beat
Q4, 2018 $0.45 $0.45 0% Met
Q3, 2018 $0.51 $0.52 2.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 1.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $22.12 $22.54 1.9% Increase
April 29, 2020 $15.37 $17.78 15.7% Increase
February 27, 2020 $25.51 $27.31 7.1% Increase
October 30, 2019 $29.24 $29.72 1.6% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.87, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.87 implies a 0.0% chance of earnings manipulation.

Fundamentals And Technical Analysis

Cactus, Inc. is currently trading at $16.72/share, down −5.0% for the day. The company is trading at approximately 47.4% of its 52-week high of $35.28/share. The company’s stock price is down −25.8% since the last earnings report and down −9.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 33.95 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:WHD Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 12.65 and a forward P/E multiple of 21.17.

Cactus, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.61. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $16.72
P/E Ratio 12.7x
P/E Ratio (Fwd) 21.2x
PEG Ratio −0.4
Total Debt / Total Capital 2.0%
Levered Free Cash Flow $165.2 million
EV / EBITDA 4.3x

Finbox

Cactus, Inc. is a small-cap stock with a market capitalization of $835.6 million and a total enterprise value of $796.9 million. The company operates in the Energy sector and the Energy Equipment & Services industry.

Cactus, Inc. designs, manufactures, sells, and rents a range of wellheads and pressure control equipment. The company’s principal products include Cactus SafeDrill wellhead systems, Cactus SafeLink systems, frac stacks, zipper manifolds, and production trees. It also provides field services, such as 24-hour service crews to assist with the installation, maintenance, repair, and safe handling of the wellhead and pressure control equipment. The company sells or rents its products for onshore unconventional oil and gas wells that are utilized during the drilling, completion, and production phases of its customers’ wells. It operates 14 service centers in the United States, as well as 3 service centers in Eastern Australia. Cactus, Inc. was founded in 2011 and is headquartered in Houston, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.