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Range Resources (RRC) Q3 Earnings: Is a Surprise in Store?
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Range Resources Corporation (RRC - Free Report) is set to report third-quarter 2016 results on Oct 25, after the closing bell.
Last quarter, Range Resources delivered a positive earnings surprise of 27.59%. However, the company posted an average negative earnings surprise of 2,410.69% in the last four quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
Range Resources’ diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties. The company has an impressive inventory in the Marcellus Shale, one of the prominent emerging shale plays in the U.S. lower 48. The company's strong portfolio of productive resources should help it post better-than-average results.
It is to be noted that natural gas prices has recovered from the levels recorded in the previous two quarters. Also, oil price has improved from the mid-February lows. This has enabled exploration and production companies to engage in more upstream operations as is evidenced by the substantial increase in the U.S. rig count in recent times.
In details, Baker Hughes Inc. – the company’s data issued since 1944 is as an important yardstick for energy service providers in gauging the overall business environment of the oil and gas industry – recently declared the rig count for Sep 2016. In the U.S., the total number of rigs increased from the Aug 2016 count owing to a rise in the number of land rigs. This represents the fourth consecutive increase in the U.S. monthly rig count.
The higher in the number of rigs should translate to more exploration and production activities, which in turn, should result in increased production. The larger output could be sold at higher prices, which is a positive for upstream players like Range Resources. In fact, the company has already projected third-quarter 2016 production to be 1,430 million cubic feet equivalent per day (MMcfe/d), higher than 1,421 MMcfe/d in the prior quarter.
However, the company expects direct operating expenses during the third quarter to lie between 18–19 cents per thousand cubic feet equivalent (Mcfe), higher than 15 cents per Mcfe in second-quarter 2016. The increase in sequential expenses might dent the company’s profits.
Earnings Whispers
Our proven model does not conclusively show that Range Resources will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 23 cents.
Zacks Rank. Range Resources carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Antero Midstream Partners LP (AM - Free Report) has an Earnings ESP of +8.82% and a Zacks Rank #2. The company is likely to release earnings on Oct 26.
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Range Resources (RRC) Q3 Earnings: Is a Surprise in Store?
Range Resources Corporation (RRC - Free Report) is set to report third-quarter 2016 results on Oct 25, after the closing bell.
Last quarter, Range Resources delivered a positive earnings surprise of 27.59%. However, the company posted an average negative earnings surprise of 2,410.69% in the last four quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
Range Resources’ diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties. The company has an impressive inventory in the Marcellus Shale, one of the prominent emerging shale plays in the U.S. lower 48. The company's strong portfolio of productive resources should help it post better-than-average results.
It is to be noted that natural gas prices has recovered from the levels recorded in the previous two quarters. Also, oil price has improved from the mid-February lows. This has enabled exploration and production companies to engage in more upstream operations as is evidenced by the substantial increase in the U.S. rig count in recent times.
In details, Baker Hughes Inc. – the company’s data issued since 1944 is as an important yardstick for energy service providers in gauging the overall business environment of the oil and gas industry – recently declared the rig count for Sep 2016. In the U.S., the total number of rigs increased from the Aug 2016 count owing to a rise in the number of land rigs. This represents the fourth consecutive increase in the U.S. monthly rig count.
The higher in the number of rigs should translate to more exploration and production activities, which in turn, should result in increased production. The larger output could be sold at higher prices, which is a positive for upstream players like Range Resources. In fact, the company has already projected third-quarter 2016 production to be 1,430 million cubic feet equivalent per day (MMcfe/d), higher than 1,421 MMcfe/d in the prior quarter.
However, the company expects direct operating expenses during the third quarter to lie between 18–19 cents per thousand cubic feet equivalent (Mcfe), higher than 15 cents per Mcfe in second-quarter 2016. The increase in sequential expenses might dent the company’s profits.
Earnings Whispers
Our proven model does not conclusively show that Range Resources will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 23 cents.
Zacks Rank. Range Resources carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
RANGE RESOURCES Price and EPS Surprise
RANGE RESOURCES Price and EPS Surprise | RANGE RESOURCES Quote
Stocks to Consider
Here are some firms that have the right combination of elements to post an earnings beat this quarter:
CONE Midstream Partners LP has an Earnings ESP of +2.7% and a Zacks Rank #1. The partnership is likely to release earnings on Nov 4. You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Midstream Partners LP (AM - Free Report) has an Earnings ESP of +8.82% and a Zacks Rank #2. The company is likely to release earnings on Oct 26.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>