Major oilfield service provider Halliburton Co. (HAL - Analyst Report) is expected to release its first-quarter 2015 results before the opening bell on Monday, Apr 20.

In the preceding three-month period, the Houston, TX-based firm – which is in the process of acquiring smaller rival Baker Hughes Inc. (BHI - Analyst Report) – delivered a positive earnings surprise of 7.2% even as oil prices plummeted throughout the quarter. This is primarily owing to improved stimulation work in the U.S. Better drilling operations in the Middle East/Asia region also drove the results.

Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

As crude gets deeply entrenched into a bearish territory and revolves around the $50-a-barrel level following OPEC’s decision to hold production unchanged, the effects of booming shale supplies in North America and a stagnant European economy; the top energy companies have cut spending (particularly on the costly upstream projects) on the back of lower profit margins. This, in turn, means lesser projects coming online for oil services firms like Halliburton.

The steep decline in working rigs, together with severe pricing pressure, is likely to eat upon Halliburton’s revenues and margins.

Overall, we don’t find the operating environment conducive to an earnings beat by the company.

Earnings Whispers

Our proven model does not conclusively show that Halliburton is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -34.78%. The Most Accurate estimate for Halliburton stands at 30 cents while the Zacks Consensus Estimate is pegged higher at 46 cents.

Zacks Rank: Halliburton carries a Zacks Rank #4 (Sell), which further complicates the forecasting power of ESP. 

As it is, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

While earnings beat looks uncertain for Halliburton, here are some firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Valero Energy Corp (VLO - Analyst Report) has an Earnings ESP of +2.91% and a Zacks Rank #2 (Buy). The company is expected to release earnings on Apr 28.

Whiting Petroleum Corp. (WLL - Snapshot Report) has an Earnings ESP of +6.90% and a Zacks Rank #2. The company is slated to release earnings on Apr 29.