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WFT, FMSA, and SPN: Did Their 3Q17 Results Impress Investors?

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WFT, FMSA, and SPN: Did Their 3Q17 Results Impress Investors? PART 1 OF 10

Why Fairmount Santrol’s 3Q17 Earnings Beat Estimates

Fairmount Santrol Holdings’ 3Q17 revenues

Fairmount Santrol Holdings (FMSA) released its 3Q17 results on November 2, 2017. The company posted operating revenues of ~$280.0 million in 3Q17, up 108.0 from ~$134.8 million recorded in 3Q16.

Higher raw sand sales, increased pricing, and growth in value-added Proppant Solutions sales resulted in its overall revenue increase in 3Q17.

Why Fairmount Santrol’s 3Q17 Earnings Beat Estimates

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Revenue growth comparison

Compared to 2Q17, Fairmount Santrol Holdings’ operating revenues increased ~20.0% in 3Q17. In comparison, Weatherford International’s (WFT) 3Q17 revenues increased 7.0% over 2Q17.

Revenues for Halliburton (HAL), FMSA’s larger market cap peer, rose 10.0% during the same period. You can read more about HAL in Market Realist’s Halliburton’s 3Q17 Earnings: What Worked for the Company.

Fairmount Santrol’s 3Q17 earnings

The 3Q17 adjusted net earnings per share (or EPS) for Fairmount Santrol Holdings is $0.15. This exceeded the consensus sell-side analysts’ EPS estimate of $0.13. A significantly improved gross margin in FMSA’s Proppant Solutions segment pushed FMSA’s adjusted earnings above analysts’ estimates.

Compared to an adjusted loss in 3Q16, FMSA reported adjusted income in 3Q17. Its average adjusted EPS has exceeded consensus EPS in the past 13 quarters.

Fairmount Santrol Holdings comprises 2.9% of the VanEck Vectors Oil Services ETF (OIH). Since September 29, 2017, OIH has decreased 6.0%, paralleling the 6.0% fall in FMSA’s stock price during this period.

What affected FMSA’s reported earnings in 3Q17?

In 3Q17, Fairmount Santrol Holdings’ (FMSA) reported net income was ~$35.0 million. This was a remarkable improvement compared to 3Q16 when FMSA reported a net loss of ~$20.6 million. Higher volumes and better pricing turned the quarter around for FMSA.

Compared to 2Q17, Fairmount Santrol Holdings’ net earnings showed significant improvement. In 2Q17, FMSA’s net income was $10.5 million. In comparison, Schlumberger (SLB) nearly doubled its 3Q17 net income over 3Q16.

Next, we will compare Wall Street analysts’ estimates with Weatherford International’s (WFT) earnings in 3Q17.

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