Core Laboratories Inc

Core Laboratories Inc. (NYSE: CLB) is a leading provider of reservoir description, production enhancement and reservoir management services for the global petroleum industry. The company offers a wide range of services, including core analysis, fluid analysis, rock physics, petrophysics, and production testing. Core Laboratories operates in over 50 countries and has a global network of laboratories and offices.

Recent Financial and Business Updates:

• Core Laboratories N.V. announced its financial results for the first quarter of 2023, reporting a revenue of USD 128.4 million.
• The operating income was USD 6.5 million, with a diluted earnings per share (EPS) of USD 0.05, in accordance with U.S. generally accepted accounting principles (GAAP). However, when excluding certain items, the operating income reached USD 14.5 million, resulting in operating margins over 11% and an EPS of USD 0.19.
• The company faced typical seasonal declines in client activity and lower-than-expected completion activity in the U.S. land market but still managed to achieve comparable revenue, operating income, and operating margins compared to the previous quarter.
• Year-over-year, CLB experienced 11% revenue growth and a 100% growth in operating income, with incremental margins of 56%.
• The company's Reservoir Description and Production Enhancement segments showed strong operating margins and incremental margins. Additionally, shareholders approved the domestication of the company from the Netherlands to the United States.
• CLB's focus remains on maximizing free cash flow (FCF) and reducing debt. The company reported negative FCF of USD 5.4 million for the first quarter of 2023. The net debt at the end of the quarter was USD 166.7 million, with a leverage ratio of 2.18. The company plans to use free cash to reduce debt until reaching its target leverage ratio of 1.5 times or lower.
• The Board approved a cash dividend of USD 0.01 per share of common stock, payable on May 30, 2023, to shareholders of record on May 8, 2023.
• Looking ahead, CLB projects a second-quarter revenue range of USD 130 million to USD 135 million, with an expected operating income of USD 14.5 million to USD 17.5 million, resulting in operating margins of approximately 12%. The EPS for the second quarter is estimated to be between USD 0.20 and USD 0.24.

Technical Observation (on the daily chart)

The price of CLB stock has shown a consistent upward trend since making its 52-week low on September 26, 2022, with a gain of approximately 87.91%. In the past one year, there has been some correction of around 8.29%. Since the latest results announcement, the CLB share price has provided a return of around 17.10%. Currently, the stock is currently near an important resistance of USD 26.00-USD 27.50. A breakout in upward direction from this range would likely initiate a new short-term trend in the up direction. The RSI (14 period) momentum indicator is at a value of 57.12, taking some rejection from overbought zone of 70, with an expectation of some consolidation or a short-term correction before the continuation of the upward trends. Moreover, the price is currently positioned above both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term support levels.

As per the above-mentioned price action, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given Core Laboratories Inc. (NYSE: CLB) at the closing price of USD 24.90 as of June 09, 2023.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is June 09, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.

Disclaimer

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