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Why Core Laboratories (CLB) Stock Is Down Today

NEW YORK (TheStreet) -- Core Laboratories (CLB) stock is dropping today after the oil and gas services provider reduced its second-quarter and full-year earnings and revenue guidance. By midmorning, shares had dropped 17.6% to $155.86. 

The company expects net income for the quarter ending June between $1.32 and $1.35 a share and revenue of $265 million to $270 million. Analysts surveyed by Thomson Reuters expected earnings of $1.52 a share and revenue of $287.99 million. 

For its full year, Core guides for earnings of $5.80 to $6 a share and revenue of $1.1 billion. Analysts forecast $6.20 a share and $1.16 billion in sales. 

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"The lowered second quarter 2014 revenue and EPS guidance are primarily caused by North American clients that now project sampling and analyzing less than previously expected levels of reservoir fluids from established unconventional plays in the Marcellus, Bakken, Montney, Niabrara and Eagle Ford formations," the company said in a statement. 

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TheStreet Ratings team rates CORE LABORATORIES NV as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CORE LABORATORIES NV (CLB) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CORE LABORATORIES NV has improved earnings per share by 10.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CORE LABORATORIES NV increased its bottom line by earning $5.28 versus $4.55 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $5.28).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.6%. Since the same quarter one year prior, revenues slightly increased by 0.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Energy Equipment & Services industry and the overall market, CORE LABORATORIES NV's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • 38.51% is the gross profit margin for CORE LABORATORIES NV which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.22% significantly outperformed against the industry average.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.19% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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