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CONSOL Energy Inc. (CNX - Analyst Report) will release its fourth quarter 2013 financial results before the market open on Jan 31, 2014. In the prior quarter, this multi fuel producer reported a negative surprise of 900.0%. CONSOL Energy currently has a Zacks Rank #3 (Hold). Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider This Quarter

CONSOL Energy is currently working towards its long-term strategy of focusing more on natural gas assets. In this quarter, the company completed the sale of its Consolidation Coal Company subsidiary to a unit of Murray Energy Corporation for $3.5 billion. The company expects to record a pre-tax gain of $1.3 billion in the quarter for this transaction.

In December, the company acquired gas drilling rights for 90,000 acres from Dominion Transmission, a unit of Dominion Resources (D - Snapshot Report). The acquired acreage is adjacent to the company’s existing properties.

The initiatives taken are not likely to show an immediate impact but will definitely help CONSOL to achieve its 2014 natural gas production guidance of 215–235 billion cubic feet equivalents (Bcfe), which is 30% higher than projected 2013 levels.

Earnings Whispers

Our proven model does not conclusively show that CONSOL Energy 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. This is not the case here.

Negative Zacks ESP: This is because the Most Accurate estimate stands at 6 cents while the Zacks Consensus Estimate is higher at 8 cents, resulting in -25.00% ESP.

Zacks Rank #3 (Hold): CONSOL Energy’s Zacks Rank #3 complicates the forecasting power of ESP making surprise prediction difficult. We caution investors against the stock going into the earnings announcement, as a negative Zacks ESP lowers the possibility of an earnings surprise.

Stocks to Consider

Companies in the broader sector 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 are as follows:

Denison Mines Corp. (DNN - Snapshot Report) has earnings ESP of +50.00% and carries a Zacks Rank #2 (Buy).

Walter Energy, Inc. (WLT - Analyst Report) has earnings ESP of +3.85% and carries a Zacks Rank #3 (Hold).

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