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Diamondback Energy, Inc. (FANG - Free Report) is benefiting from rising oil prices and demand. This Zacks Rank #1 (Strong Buy) is expected to see double digit revenue growth in both 2021 and 2022.
Diamondback is an independent oil and natural gas company (or "E&P") headquartered in Midland Texas. It has a market cap of $15.9 billion and produces in the Permian Basin in West Texas.
6 Beats in a Row
Despite the coronavirus pandemic hitting the oil industry hard in 2020, Diamondback still managed to meet or beat throughout the crisis. It has beat 6 quarters in a row.
On May 3, Diamondback reported first quarter results and blew by the Zacks consensus reporting $2.30 versus the consensus of $1.73, a beat of $0.57.
It generated cash flow from operating activities of $624 million and free cash flow over $330 million.
The company tends to announce its operations update about two weeks before the earnings report, so analysts have an idea about production going into the report.
Look for the company to put out an operational update for Q2 shortly as it will report earnings on Aug 3.
Permian Focused
In the second quarter, Diamondback entered into definitive agreements to divest Williston Basin assets for $832 million. This deal is expected to close in the third quarter.
That leaves Diamondback as a Permian pure-play.
Earnings Estimates are on the Rise
Diamondback hedges its oil production so it's not getting the full realization of the $70+ crude price.
The first quarter average unhedged realized prices were $56.94 per barrel of oil, $3.05 per Mcf of natural gas and $22.94 per barrel of natural gas liquids, resulting in a total equivalent unhedged price of $42.36 per BOE.
But that hasn't impacted the earnings consensus for 2021 or 2022 as analysts are still bullish.
1 estimate has been raised in just the last week, ahead of the upcoming operational update. That has pushed the 2021 Zacks Consensus to $9.02 from $8.61 a month ago.
That is earnings growth of 196% as the company made just $3.04 during last year's difficult pandemic conditions which resulted in a plunge in oil demand and prices.
With the hedges expected to lighten up in 2022, the analysts are even more bullish about earnings.
The 2022 Zacks Consensus Estimate has risen to $11.41 from $10.23 in the last month. That's another gain of 26.6%.
Image Source: Zacks Investment Research
Bull Market in Oil Stocks?
The oil stocks have not been the place to be in the last 5 years.
Diamondback shares are up just 5.3% compared to the S&P 500, which has gained 125%, in the same time period.
Image Source: Zacks Investment Research
But shares are red hot in 2021 as WTI has moved higher, gaining 81% year-to-date.
Shares are still dirt cheap, with a forward P/E of 9.8 and a PEG of just 0.4. A PEG under 1.0 usually means a company has both growth and value.
Oil stocks are cyclical. After 5 rough years, the trend is finally in place for the companies to cash in.
Diamondback has been rewarding shareholders with a dividend, which is currently yielding 1.8%.
The Exploration & Production Industry is now in the top 14% of the Zacks Ranked Industries.
11 U.S. exploration companies, including Diamondback, are Zacks Rank #1 (Strong Buy) stocks as their earnings estimates continue to rise.
That list includes explorers such as Matador Resources (MTDR - Free Report) , Magnolia Oil & Gas (MGY - Free Report) , Range Resources (RRC - Free Report) and Continental Resources .
For those looking for a way to play the rising crude price and the reopening of the global economy, Diamondback Energy is one to keep on your short list.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
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.
Image: Bigstock
Bull of the Day: Diamondback Energy (FANG)
Diamondback Energy, Inc. (FANG - Free Report) is benefiting from rising oil prices and demand. This Zacks Rank #1 (Strong Buy) is expected to see double digit revenue growth in both 2021 and 2022.
Diamondback is an independent oil and natural gas company (or "E&P") headquartered in Midland Texas. It has a market cap of $15.9 billion and produces in the Permian Basin in West Texas.
6 Beats in a Row
Despite the coronavirus pandemic hitting the oil industry hard in 2020, Diamondback still managed to meet or beat throughout the crisis. It has beat 6 quarters in a row.
On May 3, Diamondback reported first quarter results and blew by the Zacks consensus reporting $2.30 versus the consensus of $1.73, a beat of $0.57.
It generated cash flow from operating activities of $624 million and free cash flow over $330 million.
The company tends to announce its operations update about two weeks before the earnings report, so analysts have an idea about production going into the report.
Look for the company to put out an operational update for Q2 shortly as it will report earnings on Aug 3.
Permian Focused
In the second quarter, Diamondback entered into definitive agreements to divest Williston Basin assets for $832 million. This deal is expected to close in the third quarter.
That leaves Diamondback as a Permian pure-play.
Earnings Estimates are on the Rise
Diamondback hedges its oil production so it's not getting the full realization of the $70+ crude price.
The first quarter average unhedged realized prices were $56.94 per barrel of oil, $3.05 per Mcf of natural gas and $22.94 per barrel of natural gas liquids, resulting in a total equivalent unhedged price of $42.36 per BOE.
But that hasn't impacted the earnings consensus for 2021 or 2022 as analysts are still bullish.
1 estimate has been raised in just the last week, ahead of the upcoming operational update. That has pushed the 2021 Zacks Consensus to $9.02 from $8.61 a month ago.
That is earnings growth of 196% as the company made just $3.04 during last year's difficult pandemic conditions which resulted in a plunge in oil demand and prices.
With the hedges expected to lighten up in 2022, the analysts are even more bullish about earnings.
The 2022 Zacks Consensus Estimate has risen to $11.41 from $10.23 in the last month. That's another gain of 26.6%.
Bull Market in Oil Stocks?
The oil stocks have not been the place to be in the last 5 years.
Diamondback shares are up just 5.3% compared to the S&P 500, which has gained 125%, in the same time period.
But shares are red hot in 2021 as WTI has moved higher, gaining 81% year-to-date.
Shares are still dirt cheap, with a forward P/E of 9.8 and a PEG of just 0.4. A PEG under 1.0 usually means a company has both growth and value.
Oil stocks are cyclical. After 5 rough years, the trend is finally in place for the companies to cash in.
Diamondback has been rewarding shareholders with a dividend, which is currently yielding 1.8%.
The Exploration & Production Industry is now in the top 14% of the Zacks Ranked Industries.
11 U.S. exploration companies, including Diamondback, are Zacks Rank #1 (Strong Buy) stocks as their earnings estimates continue to rise.
That list includes explorers such as Matador Resources (MTDR - Free Report) , Magnolia Oil & Gas (MGY - Free Report) , Range Resources (RRC - Free Report) and Continental Resources .
For those looking for a way to play the rising crude price and the reopening of the global economy, Diamondback Energy is one to keep on your short list.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
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.
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