Earnings season kicks off this week, which means a lot of early mornings and long nights for Wall Street analysts. For us Fools, earnings season is really just a time to check in with the companies we own, in order to make sure the investment thesis remains intact. That being said, there are some companies that do need to be watched a bit more closely, which is why I’m going to be paying special attention to the following three names.
It was a tough quarter for Nuverra Environmental Solutions Inc (NYSE:NES) as its name change didn’t help boost its stock price, which declined by almost 33%. Other than slightly missing earnings due to weather issues, it was a fairly quiet quarter for the company. The only other real news during the quarter was the company’s acquisition of a solid waste disposal site in the Bakken.
This quarter I’ll be looking to see if the company changes its guidance for full-year revenue and adjusted EBITDA. The guidance numbers to watch are revenue of $750 million-$825 million and adjusted EBITDA range of $200 million-$225 million, which the company held steady even after missing guidance last quarter due to the aforementioned weather problems. If Nuverra Environmental Solutions Inc (NYSE:NES) misses again, causing it to reduce guidance, it could signal that the company is experiencing deeper problems than expected. Meanwhile, reaffirming guidance at the upper end of the range would be a welcome sign that its full-cycle environmental solution is really beginning to catch on with customers.
While all has been quiet at Nuverra Environmental Solutions Inc (NYSE:NES), the same can’t be said for SandRidge Energy Inc. (NYSE:SD). The company, which was under pressure from activist investors, decided it was time to show founder and former CEO Tom Ward the door. Now with new leadership in place, SandRidge Energy Inc. (NYSE:SD) needs to move past its past and begin to live up to its promise.
That promise is as vast as its massive 1.85 million net acre position in the Mississippian Lime formation. With enough capital to develop the play through 2015, the key for the company now is to simply execute on its plan to produce high rates of return from the play. That means I’ll be keeping an eye on well costs as well as oil production. The key numbers here are well costs below $3 million per well and oil production growth of at least 64% in the Mississippian. If SandRidge Energy Inc. (NYSE:SD) can remain on pace to meet or exceed those numbers this quarter, it should bode well for its future.
The last company I’ll be watching this quarter is Magnum Hunter Resources Corp (NYSE:MHR), which will finally be delivering its first quarter results on July 9. The company has been behind in providing investors with results this year after it fired its auditors, which caused its annual report, and subsequent first-quarter report, to be delayed.