Cactus is Monday's IBD Stock Of The Day, as the oilfield services firm forges ahead near a buy point after posting better-than-expected Q2 earnings and revenue earlier in August. WHD stock gained ground Monday.
The Houston-based firm designs, manufactures and sells wellhead and pressure control equipment for oil rigs. The company focuses on onshore oil and gas wells and also provides oilfield services.
Cactus operates 15 service centers in Texas, New Mexico, Pennsylvania, North Dakota, Louisiana, Oklahoma, Colorado, Utah and Wyoming. The firm also has locations in Eastern Australia and provides rental and field service operations in Saudi Arabia.
Over the past three quarters, Cactus has averaged 94% earnings growth. On Aug. 7, Cactus topped Q2 earnings and revenue targets, with EPS surging 90% and sales growing 80%.
Chief Executive Officer Scott Bender told analysts that a decline in U.S. land rig counts would affect results, despite the company's offshore focus.
"Looking ahead to the third quarter, we anticipate revenue to be down sequentially due to lower U.S. land activity levels," Bender said.
Oil Rig Count Decline
However, the CEO said the declines appear to have run their course.
"We believe the majority of the rig count declines are behind us and are optimistic that drilling activity levels in the fourth quarter will be flat to up," Bender added.
For the week to Aug. 25, the oil and gas rig count fell by 10 to 632, the lowest since February 2022, according to the weekly Baker Hughes report. The total rig count is down 17% vs. the same time in 2022.
Analysts predict WHD's average EPS growth to slip in the upcoming two quarters. However, Wall Street predicts 2023 full-year earnings to jump 64% to $3.02 per share with sales increasing 60%, topping $1 billion for the first time.
WHD Stock Action
WHD stock gained 2.7% to 52.23 during Monday's market action. Shares have advanced 5% in 2023, forming a deep cup-with-handle base with a 53.85 buy point, according to MarketSmith analysis.
Cactus stock has found support at its 21-day exponential moving average. But with the market in correction, investors should not be necessarily be making new buys. Instead, it may be better to play defense and to be ready to cut individual holdings as needed. It's also a time to build a watchlist of well-positioned leaders.
The IBD-tracked Oil & Gas-Machinery/Equipment industry group has gained 22% in 2023, outperforming the market.
Cactus stock has a perfect Composite Rating of 99 and a strong Relative Strength Rating of 92. WHD stock has an EPS Rating of 81 out of 99.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
YOU MAY ALSO LIKE:
Get An Edge In The Stock Market With IBD Digital
