National Energy Services Reunited (NESR) Surges 14.3%: Is This an Indication of Further Gains?

National Energy Services Reunited (NESR) shares rallied 14.3% in the last trading session to close at $14.1. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 20.3% gain over the past four weeks.

The surge can be attributed to a higher demand for NESR’s oilfield services driven by the overall increase in oil and gas demand. The company is one of the largest oilfield service providers in the Middle East and North Africa (MENA) region. Drilling activity in the MENA region has witnessed a boost in recent years, and unconventional oil and gas resources have emerged as the primary growth engine in the upstream sector. While drilling activity has softened in the United States, NESR is poised to witness growth across Latin America, in countries like Guyana and Brazil, and in the MENA region across Algeria, Libya, the UAE, Oman, and Kuwait. The company is focusing on securing a robust backlog and building a solid project pipeline, which is expected to ensure sustained demand for its services, maintain profitability, and contribute to revenue growth amid rising global oil and gas demand. 

This company is expected to post quarterly earnings of $0.15 per share in its upcoming report, which represents a year-over-year change of -51.6%. Revenues are expected to be $291.25 million, down 13.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For National Energy Services Reunited, the consensus EPS estimate for the quarter has been revised 25% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on NESR going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

National Energy Services Reunited is part of the Zacks Oil and Gas - Mechanical and and Equipment industry. USA Compression Partners (USAC), another stock in the same industry, closed the last trading session 0.9% lower at $22.06. USAC has returned -7.3% in the past month.

For USA Compression, the consensus EPS estimate for the upcoming report has changed +2.9% over the past month to $0.22. This represents a change of +69.2% from what the company reported a year ago. USA Compression currently has a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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