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U.S. energy giant Chevron Corp. (CVX - Analyst Report) is set to release its second-quarter 2014 results before the opening bell on Friday, Aug 1.

In the preceding three-month period, Chevron delivered a negative 6.7% earnings surprise – the fourth successive quarterly underperformance – as production and oil prices fell. Let’s see how things are shaping up for this announcement.

Factors to Consider This Quarter

In its interim update earlier this month, the second-largest U.S. oil company by market value after Exxon Mobil Corp. (XOM - Analyst Report) cautioned about a decline in its international output. This was attributed to shutdown of the Angola LNG facility and planned turnaround activity in Kazakhstan.

As it is, due to its integrated nature, Chevron is particularly susceptible to downside risk from any weakness in the global economy. We are also concerned by the company’s high level of capital spending, which may result in reduced returns going forward.

Lastly, foreign exchange losses are expected to widen from the first-quarter level.

Earnings Whispers?

Our proven model does not conclusively show that Chevron 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.

Negative Zacks ESP: This is because the Most Accurate estimate stands at $2.67, while the Zacks Consensus is higher at $2.68. This results in an ESP of -0.37%.

Zacks Rank #3 (Hold): Chevron carries a Zacks Rank #3 (Hold), which when combined with a negative ESP makes surprise prediction difficult.

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 Chevron, 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:

Mid-Con Energy Partners L.P. (MCEP - Snapshot Report) has an Earnings ESP of +8.89% and holds a Zacks Rank #2 (Buy).

Cimarex Energy Co. (XEC - Snapshot Report) has an Earnings ESP of +0.58% and holds a Zacks Rank #2.

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