Grey Wolf GW is slated to report earnings after the close Wednesday, and its results could move the stock. So we want to give you a preview on what to expect, and are taking no action in this Alert.
According to consensus estimates, Grey Wolf is expected to report first-quarter earnings of 23 cents a share on revenue of $234 million. As we have mentioned in past summaries, this quarter's numbers will be closely watched for news about the company's dayrates (the rates a drilling contractor receives per day for a drilling rig). Last quarter, Grey Wolf reported a larger-than-expected decline in dayrates, despite a favorable trend in the industry, which has weighed on the stock.
Even so, over the past two months shares have trended higher along with the rest of the industry, particularly as oil and gas prices have mounted. Many analysts have become bullish on the drilling sector in light of the 25% jump in natural gas prices since the beginning of January. If Grey Wolf's results beat expectations, we could see a nice run up to $8 a share. The stock was recently trading at $7.28.
However, we are maintaining our Two rating until we see evidence of a turnaround in dayrates. We will update you following the company's conference call, which is scheduled for 10 a.m. EDT Thursday.
Frank Curzio is a research associate at TheStreet.com.
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