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BP and Equinox Gold have been highlighted as Zacks Bull and Bear of the Day
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For Immediate Release
Chicago, IL – July 11, 2022 – Zacks Equity Research shares BP (BP - Free Report) as the Bull of the Day and Equinox Gold (EQX - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Occidental Petroleum (OXY - Free Report) , Coterra Energy (CTRA - Free Report) and Valero Energy (VLO - Free Report) .
After leading the way most of the year, energy stocks have taken a breather. I see several large names down over 20% from their early June highs. It makes some sense, given the fact that crude oil prices are well off the highs as well. However, this latest pullback could actually be a fantastic buying opportunity. As prices have come down on these stocks, earnings continue to rise. That sort of divergence between the price and earnings could mean huge profits lie ahead for investors.
Today's Bull of the Day is one of these energy stocks that has come down off the highs. It's Zacks Rank #1 (Strong Buy) BP. BP p.l.c. engages in the energy business worldwide. It operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power, and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture and storage.
The reason for the favorable Zacks Rank is four analysts have increased their earnings estimates for the current year and next year. The bullish behavior has pushed up our Zacks Consensus Estimates for the current year from $5.66 to $7.48 while next year's is up from $5.09 to $5.85. That means that the current PE for BP sits all the way down at 3.72x earnings. Compare that to an industry average of 6.3x and the broad market's 17.31x.
A quick look at the Price, Consensus and EPS Surprise Chart reveals the divergence between the stock's price and earnings. Earnings are much higher than they were during 2019 when BP shares were trading in the mid-$40s. Think about that. Earnings are higher and the stock price is significantly lower.
Not only does BP have a strong underlying earnings trend, but it also pays a very healthy dividend. At its current price of $27.84, BP yields 4.64%. That means that long-term investors get paid to wait for the price to catch up with earnings.
You would think that during a period of global turmoil that gold prices would be on the rise. War and inflation are two major reasons the gold bugs out there load the boat. That should make gold mining stocks some of the hottest commodities on Earth. In reality, that has simply not been the case. In fact, there are several gold mining stocks that are seeing earnings contractions rather than any meaningful expansion.
One such stock is today's Bear of the Day, Equinox Gold . Equinox Gold Corp. engages in the operation, acquisition, exploration, and development of mineral properties. The company primarily explores for gold and silver deposits. Its properties include the Aurizona gold mine located in Maranhão State; the RDM gold mine located in Minas Gerais State; and Fazenda gold mine and the Santa Luz gold mine located in Bahia State, Brazil. The company also hold interests in the Mesquite gold mine and the Castle Mountain property situated in California, the United States; and the Los Filos Gold Mine located in Guerrero State, Mexico.
Revenue growth and earnings growth are not the problem here. Equinox is slated to bring in $1.21 billion in revenue this year, that's 11.53% better than last year, while next year is forecast to grow at 15.33%. That translates to 9% EPS growth this year, nearly doubling from 24 cents to 45 cents next year.
The problem is analysts moving their earnings estimates to the downside for the current year. Over the last sixty days, two analysts have cut their expectations for the current year, dropping our Zacks Consensus Estimate from 30 cents to 24 cents.
The Mining – Gold industry is in the Bottom 34% of our Zacks Industry Rank.
Additional content:
EIA Oil Supply Data Headlines: Crude Stocks Up, Fuel Down
U.S. crude prices ended sharply higher on Thursday as investors looked past the Energy Information Administration's ("EIA") latest report showing a big stockpile build. Instead, the market took note of the fall in gasoline and distillate supplies and their consistently high demand. On the New York Mercantile Exchange, WTI crude futures gained 4.2% to settle at $102.73 a barrel.
Let's dig deep into the EIA's Weekly Petroleum Status Report for the holiday-shortened week ending Jul 1.
Analyzing the Latest EIA Report
Crude Oil: The federal government's EIA report revealed that crude inventories rose 8.2 million barrels. A sharp drop in exports and jump in imports primarily accounted for the significant stockpile build with the world's biggest oil consumer even as refinery demand remains robust. Total domestic stocks now stand at 423.8 million barrels — 4.9% less than the year-ago figure and 10% lower than the five-year average.
On a further bearish note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) edged up 69,000 barrels to 21.3 million barrels.
Meanwhile, the crude supply cover was up from 25.3 days in the previous week to 25.8 days. In the year-ago period, the supply cover was 27.5 days.
Let's turn to the products now.
Gasoline: Gasoline supplies decreased for the twelfth time in 14 weeks. The 2.5 million-barrel drop was attributable to the continued strength in demand. At 219.1 million barrels, the current stock of the most widely used petroleum product is 7% less than the year-earlier level and 8% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell after rising for four weeks. The 1.3 million-barrel decline primarily reflected a pickup in demand. Following the recent supply withdrawal, current inventories — at 111.1 million barrels — are 19.9% below the year-ago level and 20% lower than the five-year average.
Refinery Rates:Refinery utilization, at 94.5%, fell 0.5% from the prior week.
Final Word
Oil prices continue to trade above $100, as lingering supply worries offset concerns about slowing economic growth (and by extension, crude demand).
The Oil/Energy market continues to enjoy support from geopolitical uncertainty amid Russia's military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity.
The Biden administration's ban on the import of Russian crude and energy products contributed to oil's rapid price increase. Agreed, crude has pulled back from those lofty levels but with the conflict showing no signs of a quick resolution and the European Union following the United States in blocking imports of Russian energy — even at the detriment of their economies — is giving fresh impetus to the oil bulls.
While there are jitters over soaring inflation and stuttering economic growth, these have been more than offset by the market's precariously low level of spare capacity, China's emergence from its strict COVID-19 restrictions, a stretched-out refining system, plus production disruptions in Libya and Ecuador.
Even the fundamentals point to a tightening of the market. Per the latest government report, U.S. commercial stockpiles have been down some 10% from their five-year average for this time of year, prompted by a demand spike owing to the reopening of economies and a rebound in activity.
As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen 27.9% year to date against an 18.1% loss for the broader S&P 500 benchmark.
Consequently, the top three gainers of the S&P 500 this year are all energy-related names: Occidental Petroleum, Coterra Energy and Valero Energy.
Occidental Petroleum: OXY is the top-performing S&P 500 stock in 2022, with a gain of 112%. Occidental Petroleum's expected EPS growth rate for three to five years is currently 32.3%, which compares favorably with the industry's growth rate of 30.4%.
OXY has a projected earnings growth rate of 315.3% for this year. The Zacks Consensus Estimate for Occidental Petroleum's 2022 earnings has been revised 13.3% upward over the past 60 days.
Corterra Energy: This stock was the second-best performer in the S&P 500 Index, with shares having appreciated 43.3% in 2022. CTRA has a projected earnings growth rate of 88.4% for this year.
The Zacks Consensus Estimate for Corterra Energy's 2022 earnings has been revised 3.7% upward over the past 60 days. CTRA's expected EPS growth rate for three to five years is currently 55%, which compares favorably with the industry's growth rate of 26.8%.
Valero Energy: Valero Energy shares have appreciated 41.6% so far in 2022. VLO, carrying a Zacks Rank of #1 (Strong Buy), has a projected earnings growth rate of 511.4% for this year.
The Zacks Consensus Estimate for Valero Energy's 2022 earnings has been revised 34.7% upward over the past 60 days. VLO beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 84.3%.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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BP and Equinox Gold have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 11, 2022 – Zacks Equity Research shares BP (BP - Free Report) as the Bull of the Day and Equinox Gold (EQX - Free Report) asthe Bear of the Day. In addition, Zacks Equity Research provides analysis on Occidental Petroleum (OXY - Free Report) , Coterra Energy (CTRA - Free Report) and Valero Energy (VLO - Free Report) .
Here is a synopsis of all five stocks:
Bull of the Day:
After leading the way most of the year, energy stocks have taken a breather. I see several large names down over 20% from their early June highs. It makes some sense, given the fact that crude oil prices are well off the highs as well. However, this latest pullback could actually be a fantastic buying opportunity. As prices have come down on these stocks, earnings continue to rise. That sort of divergence between the price and earnings could mean huge profits lie ahead for investors.
Today's Bull of the Day is one of these energy stocks that has come down off the highs. It's Zacks Rank #1 (Strong Buy) BP. BP p.l.c. engages in the energy business worldwide. It operates through Gas & Low Carbon Energy, Oil Production & Operations, Customers & Products, and Rosneft segments. It produces and trades in natural gas; offers biofuels; operates onshore and offshore wind power, and solar power generating facilities; and provides de-carbonization solutions and services, such as hydrogen and carbon capture and storage.
The reason for the favorable Zacks Rank is four analysts have increased their earnings estimates for the current year and next year. The bullish behavior has pushed up our Zacks Consensus Estimates for the current year from $5.66 to $7.48 while next year's is up from $5.09 to $5.85. That means that the current PE for BP sits all the way down at 3.72x earnings. Compare that to an industry average of 6.3x and the broad market's 17.31x.
A quick look at the Price, Consensus and EPS Surprise Chart reveals the divergence between the stock's price and earnings. Earnings are much higher than they were during 2019 when BP shares were trading in the mid-$40s. Think about that. Earnings are higher and the stock price is significantly lower.
Not only does BP have a strong underlying earnings trend, but it also pays a very healthy dividend. At its current price of $27.84, BP yields 4.64%. That means that long-term investors get paid to wait for the price to catch up with earnings.
Bear of the Day:
You would think that during a period of global turmoil that gold prices would be on the rise. War and inflation are two major reasons the gold bugs out there load the boat. That should make gold mining stocks some of the hottest commodities on Earth. In reality, that has simply not been the case. In fact, there are several gold mining stocks that are seeing earnings contractions rather than any meaningful expansion.
One such stock is today's Bear of the Day, Equinox Gold . Equinox Gold Corp. engages in the operation, acquisition, exploration, and development of mineral properties. The company primarily explores for gold and silver deposits. Its properties include the Aurizona gold mine located in Maranhão State; the RDM gold mine located in Minas Gerais State; and Fazenda gold mine and the Santa Luz gold mine located in Bahia State, Brazil. The company also hold interests in the Mesquite gold mine and the Castle Mountain property situated in California, the United States; and the Los Filos Gold Mine located in Guerrero State, Mexico.
Revenue growth and earnings growth are not the problem here. Equinox is slated to bring in $1.21 billion in revenue this year, that's 11.53% better than last year, while next year is forecast to grow at 15.33%. That translates to 9% EPS growth this year, nearly doubling from 24 cents to 45 cents next year.
The problem is analysts moving their earnings estimates to the downside for the current year. Over the last sixty days, two analysts have cut their expectations for the current year, dropping our Zacks Consensus Estimate from 30 cents to 24 cents.
The Mining – Gold industry is in the Bottom 34% of our Zacks Industry Rank.
Additional content:
EIA Oil Supply Data Headlines: Crude Stocks Up, Fuel Down
U.S. crude prices ended sharply higher on Thursday as investors looked past the Energy Information Administration's ("EIA") latest report showing a big stockpile build. Instead, the market took note of the fall in gasoline and distillate supplies and their consistently high demand. On the New York Mercantile Exchange, WTI crude futures gained 4.2% to settle at $102.73 a barrel.
Let's dig deep into the EIA's Weekly Petroleum Status Report for the holiday-shortened week ending Jul 1.
Analyzing the Latest EIA Report
Crude Oil: The federal government's EIA report revealed that crude inventories rose 8.2 million barrels. A sharp drop in exports and jump in imports primarily accounted for the significant stockpile build with the world's biggest oil consumer even as refinery demand remains robust. Total domestic stocks now stand at 423.8 million barrels — 4.9% less than the year-ago figure and 10% lower than the five-year average.
On a further bearish note, the latest report showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) edged up 69,000 barrels to 21.3 million barrels.
Meanwhile, the crude supply cover was up from 25.3 days in the previous week to 25.8 days. In the year-ago period, the supply cover was 27.5 days.
Let's turn to the products now.
Gasoline: Gasoline supplies decreased for the twelfth time in 14 weeks. The 2.5 million-barrel drop was attributable to the continued strength in demand. At 219.1 million barrels, the current stock of the most widely used petroleum product is 7% less than the year-earlier level and 8% below the five-year average range.
Distillate: Distillate fuel supplies (including diesel and heating oil) fell after rising for four weeks. The 1.3 million-barrel decline primarily reflected a pickup in demand. Following the recent supply withdrawal, current inventories — at 111.1 million barrels — are 19.9% below the year-ago level and 20% lower than the five-year average.
Refinery Rates:Refinery utilization, at 94.5%, fell 0.5% from the prior week.
Final Word
Oil prices continue to trade above $100, as lingering supply worries offset concerns about slowing economic growth (and by extension, crude demand).
The Oil/Energy market continues to enjoy support from geopolitical uncertainty amid Russia's military operations in Ukraine. In March, crude prices surged to multi-year highs of $130 on concerns about supplies from Russia, which is one of the world's largest producers of the commodity.
The Biden administration's ban on the import of Russian crude and energy products contributed to oil's rapid price increase. Agreed, crude has pulled back from those lofty levels but with the conflict showing no signs of a quick resolution and the European Union following the United States in blocking imports of Russian energy — even at the detriment of their economies — is giving fresh impetus to the oil bulls.
While there are jitters over soaring inflation and stuttering economic growth, these have been more than offset by the market's precariously low level of spare capacity, China's emergence from its strict COVID-19 restrictions, a stretched-out refining system, plus production disruptions in Libya and Ecuador.
Even the fundamentals point to a tightening of the market. Per the latest government report, U.S. commercial stockpiles have been down some 10% from their five-year average for this time of year, prompted by a demand spike owing to the reopening of economies and a rebound in activity.
As a matter of fact, the Energy Select Sector SPDR — an assortment of the largest U.S. companies thronging the space — has risen 27.9% year to date against an 18.1% loss for the broader S&P 500 benchmark.
Consequently, the top three gainers of the S&P 500 this year are all energy-related names: Occidental Petroleum, Coterra Energy and Valero Energy.
Occidental Petroleum: OXY is the top-performing S&P 500 stock in 2022, with a gain of 112%. Occidental Petroleum's expected EPS growth rate for three to five years is currently 32.3%, which compares favorably with the industry's growth rate of 30.4%.
OXY has a projected earnings growth rate of 315.3% for this year. The Zacks Consensus Estimate for Occidental Petroleum's 2022 earnings has been revised 13.3% upward over the past 60 days.
Corterra Energy: This stock was the second-best performer in the S&P 500 Index, with shares having appreciated 43.3% in 2022. CTRA has a projected earnings growth rate of 88.4% for this year.
The Zacks Consensus Estimate for Corterra Energy's 2022 earnings has been revised 3.7% upward over the past 60 days. CTRA's expected EPS growth rate for three to five years is currently 55%, which compares favorably with the industry's growth rate of 26.8%.
Valero Energy: Valero Energy shares have appreciated 41.6% so far in 2022. VLO, carrying a Zacks Rank of #1 (Strong Buy), has a projected earnings growth rate of 511.4% for this year.
You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Valero Energy's 2022 earnings has been revised 34.7% upward over the past 60 days. VLO beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 84.3%.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared +40.3%, +48.2%, +67.6%, +94.4%, and +95.3%. Today you can access their live picks without cost or obligation.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.