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Domestic energy explorer Comstock Resources Inc. (CRK - Analyst Report) is set to release its fourth quarter results after the closing bell on Monday, Feb 10.

In the preceding three-month period, Comstock delivered a negative 33.33% earnings surprise – the fourth underperformance in as many quarters – hamstrung by a drop in natural gas output amid  lower drilling activity in the Haynesville and Bossier wells. Let’s see how things are shaping up prior to this announcement.

Factors to Consider This Quarter

Comstock’s highly gas-weighted reserves/production profile, along with its geographically concentrated asset base, is the key area of concern. Additionally, the rise in net debt/reduction of liquidity associated with the recent Delaware Basin acquisition is a drag on the balance sheet.

Taking a cautious view of gas prices, the company’s capital program specifically focuses on the promising North American liquids-rich areas, which is a major shift away from dry natural gas development. While subscribing to management’s outlook, we believe the realignment of Comstock will take some time to bear results. Until then, Comstock’s ability to generate positive earnings surprise will be limited.

In fact, the Zacks Consensus Estimate for the fourth quarter has moved down by 8 cents to a loss of 23 cents per unit over the last 30 days as the tendency for a downward estimate revision was more obvious.

Earnings Whispers?

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

Negative Zacks ESP:This is because the Most Accurate estimate stands at a loss of 24 cents, while the Zacks Consensus is narrower at a loss of 23 cents. This results in a difference of -4.35%.

Zacks Rank #3 (Hold):Comstock’s Zacks Rank #3 (Hold), however, increases the predictive power of ESP. That said, we also need to have a positive ESP to be confident of an earnings surprise call.

We caution against stocks with Zacks Rank #4 and 5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

While earnings beat looks unlikely for Comstock, here are some energy 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:

Breitburn Energy Partners L.P. (BBEP - Snapshot Report), with Earnings ESP of +3.57% and a Zacks Rank #2 (Buy).

Cheniere Energy Inc. (LNG - Snapshot Report), with Earnings ESP of +17.86% and a Zacks Rank #2.

Energy Transfer Equity L.P. (ETE - Snapshot Report), with Earnings ESP of +25.93% and a Zacks Rank #2.

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