Why Basic Energy Services Shares Dropped
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 well service company Basic Energy Services fell 12% today after reporting earnings.
So what: Revenue dropped 9.9% from a year ago to $325.7 million, but that did beat estimates of $319.3 million from Wall Street. The bad news is the adjusted loss of $0.15 per share, which was $0.06 behind estimates.
Now what: Management was also less than bullish on the future, saying that demand will likely be subdued for the rest of the year despite high oil prices. Drillers aren't rushing to start new wells despite high prices because they've seen what a flood of new supply can do to the market. That will keep a cap on earnings, but with shares trading at 25 times forward estimates, the stock is too expensive to jump into today.
Basic Energy Services has run into weak demand recently but record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza". Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.
The article Why Basic Energy Services Shares Dropped originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.