Oceaneering International (OII) Up 17% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Oceaneering International (OII). Shares have added about 17% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Oceaneering International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Oceaneering International's Q3 Earnings Lag Estimates, Revenues BeatOceaneering International reported an adjusted third-quarter 2024 profit of 36 cents per share, which missed the Zacks Consensus Estimate of 44 cents.  This was due to lower-than-expected operating income from the company’s Subsea Robotics, Offshore Projects Group, Integrity Management & Digital Solutions and Aerospace and Defense Technologies segments.However, the bottom line was flat year over year.  This can be attributed to year-over-year strong operating income from the Manufactured Products segment.Total revenues were $679.8 million, which beat the Zacks Consensus Estimate of $674 million and increased approximately 7.1% from the year-ago level of $635 million.The company bought back 422,229 shares at a cost of around $10 million in the third quarter. OII reported a net income of $41.2 million and an adjusted EBITDA of $98.1 million, while consolidated operating income for the same period was $71.3 million.OII's fleet of Remotely Operated Vehicles (ROVs) numbered 250 with a utilization rate of 69%.Segmental InformationSubsea Robotics: The unit provides remotely operated submersible vehicles for drill support, vessel-based inspection, subsea hardware installation, pipeline surveys and maintenance services.Revenues totaled $215.7 million compared with the year-ago quarter’s $197.3 million. The top line surpassed our projection of $201.5 million.The segment also reported an operating income of $65.7 million compared with $47.8 million a year ago. The figure was also higher than our estimate of $60.6 million.Manufactured Products: The segment focuses on the manufactured products business, theme park entertainment systems and automated guided vehicles.Revenues amounted to $143.7 million, up substantially from the prior-year figure of $122.9 million. However, the top line missed our projection of $157.4 million. The segment posted an operating profit of about $11.3 million, up from the year-ago quarter’s $8.2 million. Moreover, the reported figure beat our estimate of $9.1 million.Additionally, the backlog rose to $671 million as of Sept. 30, 2024, from $556 million as of Sept. 30, 2023.Offshore Projects Group: This segment involves Oceaneering’s former Subsea Projects unit, excluding survey services and global data solutions and the service and rental business, excluding ROV tooling.Revenues decreased about 1.9% to $147.5 million from $150.3 million in the year-ago quarter, due to changes in project mix in international markets, vessel crane repair costs and associated vessel downtime. However, the figure beat our projection of $144.3 million. The unit’s operating income totaled $20.3 million compared with the prior-year quarter’s $26.7 million. The figure beat our estimate of $18.7 million.Integrity Management & Digital Solutions: This segment covers Oceaneering’s Asset Integrity unit, along with its global data solutions business.Revenues of $73.5 million increased from the year-ago quarter’s $66.1 million. However, the figure marginally missed our projection of $73.6 million. The segment reported an operating income of $0.7 million, down from the prior-year quarter’s $3.2 million. The figure also missed our estimate of $0.9 million.Aerospace and Defense Technologies: The segment is engaged in Oceaneering’s government business, which focuses on defense subsea technologies, marine services and space systems.Revenues totaled $99.2 million, marginally up from $98.6 million recorded in the third quarter of 2023.  Moreover, the figure beat our estimate of $97.2 million. The operating income dropped to $12.2 million from $14.1 million in the year-ago quarter and missed our estimate of $12.9 million.Capital Expenditure & Balance SheetThe capital expenditure in the third quarter, including acquisitions, totaled $24.9 million.As of Sept. 30, 2024, OII had cash and cash equivalents worth $451.9 million and $461.6 million, respectively, along with a long-term debt of about $480.7 million. The debt-to-total capital was 40.6%.OutlookThe company has updated its full-year guidance for 2024 and has introduced initial projections for 2025.For the fourth quarter of 2024, the company expects a slight increase in consolidated revenues compared with the third quarter, while adjusted EBITDA is anticipated to remain consistent with the same.For 2024, it anticipates consolidated adjusted EBITDA to range between $340 million and $350 million. For 2025, consolidated EBITDA is expected to be between $400 million and $430 million. Free cash flow is anticipated to exceed the 2024 level.At the segment level, OII’s Subsea Robotics is predicted to experience a slight decline in revenues and operating profitability due to normal seasonal variations. Although revenues for Manufactured Products are expected to rise, operating profitability is likely to decline significantly. Conversely, Offshore Projects Group is expected to see increased revenues and notably higher operating profitability.OII’s Integrity Management & Digital Solutions is anticipated to improve its operating profitability, even with a decline in revenues, while both revenues and operating profitability for Aerospace and Defense Technologies are expected to decrease. Unallocated expenses for OII are projected to be around $40 million.Oceaneering projects increased revenues and enhanced operating performance across all segments in 2025, particularly from Subsea Robotics, Manufactured Products and Integrity Management & Digital Solutions.How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in fresh estimates.The consensus estimate has shifted 23.68% due to these changes.VGM ScoresAt this time, Oceaneering International has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Oceaneering International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerOceaneering International is part of the Zacks Oil and Gas - Field Services industry. Over the past month, Liberty Oilfield Services (LBRT), a stock from the same industry, has gained 3.4%. The company reported its results for the quarter ended September 2024 more than a month ago.Liberty Oilfield Services reported revenues of $1.14 billion in the last reported quarter, representing a year-over-year change of -6.4%. EPS of $0.45 for the same period compares with $0.85 a year ago.For the current quarter, Liberty Oilfield Services is expected to post earnings of $0.17 per share, indicating a change of -68.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -16.8% over the last 30 days.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for Liberty Oilfield Services. Also, the stock has a VGM Score of A.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Oceaneering International, Inc. (OII): Free Stock Analysis Report Liberty Energy Inc. 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