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The first quarter of 2017 is over, and now is the time to start preparing for the upcoming earnings releases. The most notable development in the January–March quarter of this year is the improved crude pricing scenario compared with first-quarter 2016. Given that crude is the primarily determinant of the fate of all energy stocks, this is undoubtedly favorable for most companies belonging to the Energy sector.
Additionally, we expect significant margin improvement, on a year-over-year basis, for the Oil/Energy sector during the first quarter. Given these positives we have picked certain oil stocks that are likely post stellar first-quarter 2017 earnings. That’s not all! These stocks also have the potential for solid earnings growth in the long run. Let’s delve deeper to find out how.
Oil Price Shows Improvement
WTI crude price has displayed significant improvement in first-quarter 2017, on a year-over-year basis. In fact, we noted substantial increase in average oil prices in the first two months this year.
According to data is provided by U.S Energy Information Administration (EIA), the average WTI crude price in January and February was $52.50 and $53.47 per barrel, respectively, compared with $31.68 and $30.32 per barrel a year ago.
This massive improvement in commodity price from the mid-Feb 2016 multi-year low level of $26.21 per barrel came on the back of OPEC’s historical production cut agreement signed on Nov 30, 2016. No doubt, the deal was one of the most effective measures to recover oil prices amid plentiful supply of the commodity. However, Mar 2017 showed a comparatively bearish trend in oil prices owing to the resurgence in output by U.S. shale producers.
Energy Sector to Witness Margin Expansion in Q1
Per our Earnings Preview report,revenue for the Oil/Energy sector is expected to improve more than 33% year over year as compared to an unimpressive 2% growth during fourth-quarter 2016.
Margins are predicted to increase 4.7% year over year compared with only 0.3% expansion during the October–December quarter of 2016. Most importantly, when 11 Zacks sectors belonging to the S&P 500 index showed a decline in margin growth for first-quarter 2017, positive anticipated growth for the Oil/Energy sector turns out impressive. Also, the sector’s margin growth is predicted to be the highest among all the 16 Zacks sectors defining the S&P 500 index.
How to Make the Right Choice?
Based on the factors discussed above, we have zeroed in on a few oil stocks that have the potential to post a substantial increase in earnings from the year-ago comparable quarter. To simplify the task we have selected stocks using our proprietary stock screener.
The stocks, with a Zacks Rank #1 (Strong Buy) or 2 (Buy), are projected to witness year-over-year earnings growth of more than 100% in first-quarter 2017.
5 Prominent Picks
Midland, TX-based Concho Resources Inc. is an upstream energy player that is involved in the exploitation and production (E&P) of oil resources in the U.S. The company operates mainly in the Permian Basin of southeast New Mexico and west Texas. Concho Resources carries a Zacks Rank #2 and will likely witness year-over-year earnings growth of 769.23% in first-quarter 2017. The company’s earnings per share is also expected to grow 20.8% over the next five years.
Pioneer Natural Resources Company (PXD - Free Report) – headquartered in Irving, TX – is also engaged in the E&P operations in the U.S plays. Presently, the company sports a Zacks Rank #1 and is likely to post earnings growth of 129.93% in first-quarter 2017. Moreover, earnings are projected to grow 9.7% over the coming five years.
Headquartered in Calgary, Canada, Cenovus Energy Inc. (CVE - Free Report) produces and markets oil and natural gas in Canada. The firm is projected to witness earnings growth of 6% over the next five years. During the January–March quarter of 2017, the company’s earnings are expected to have improved 105.6% year over year. Cenovus Energy also sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum Corporation (EPM - Free Report) - headquartered in Houston, TX – is involved in exploration and development of onshore oil resources in the U.S. The company carries a Zacks Rank #2 and is expected to witness year-over-year earnings growth of 850% in the first quarter.
Headquartered in Houston, TX, W&T Offshore Inc. (WTI - Free Report) exploits and develops oil resources in the Gulf of Mexico. W&T Offshore holds a Zacks Rank #2 and is expected to see year-over-year earnings growth of 113.7% in the first quarter.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>
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5 Oil Stock Earnings Set to Double in Q1
The first quarter of 2017 is over, and now is the time to start preparing for the upcoming earnings releases. The most notable development in the January–March quarter of this year is the improved crude pricing scenario compared with first-quarter 2016. Given that crude is the primarily determinant of the fate of all energy stocks, this is undoubtedly favorable for most companies belonging to the Energy sector.
Additionally, we expect significant margin improvement, on a year-over-year basis, for the Oil/Energy sector during the first quarter. Given these positives we have picked certain oil stocks that are likely post stellar first-quarter 2017 earnings. That’s not all! These stocks also have the potential for solid earnings growth in the long run. Let’s delve deeper to find out how.
Oil Price Shows Improvement
WTI crude price has displayed significant improvement in first-quarter 2017, on a year-over-year basis. In fact, we noted substantial increase in average oil prices in the first two months this year.
According to data is provided by U.S Energy Information Administration (EIA), the average WTI crude price in January and February was $52.50 and $53.47 per barrel, respectively, compared with $31.68 and $30.32 per barrel a year ago.
This massive improvement in commodity price from the mid-Feb 2016 multi-year low level of $26.21 per barrel came on the back of OPEC’s historical production cut agreement signed on Nov 30, 2016. No doubt, the deal was one of the most effective measures to recover oil prices amid plentiful supply of the commodity. However, Mar 2017 showed a comparatively bearish trend in oil prices owing to the resurgence in output by U.S. shale producers.
Energy Sector to Witness Margin Expansion in Q1
Per our Earnings Preview report,revenue for the Oil/Energy sector is expected to improve more than 33% year over year as compared to an unimpressive 2% growth during fourth-quarter 2016.
Margins are predicted to increase 4.7% year over year compared with only 0.3% expansion during the October–December quarter of 2016. Most importantly, when 11 Zacks sectors belonging to the S&P 500 index showed a decline in margin growth for first-quarter 2017, positive anticipated growth for the Oil/Energy sector turns out impressive. Also, the sector’s margin growth is predicted to be the highest among all the 16 Zacks sectors defining the S&P 500 index.
How to Make the Right Choice?
Based on the factors discussed above, we have zeroed in on a few oil stocks that have the potential to post a substantial increase in earnings from the year-ago comparable quarter. To simplify the task we have selected stocks using our proprietary stock screener.
The stocks, with a Zacks Rank #1 (Strong Buy) or 2 (Buy), are projected to witness year-over-year earnings growth of more than 100% in first-quarter 2017.
5 Prominent Picks
Midland, TX-based Concho Resources Inc. is an upstream energy player that is involved in the exploitation and production (E&P) of oil resources in the U.S. The company operates mainly in the Permian Basin of southeast New Mexico and west Texas. Concho Resources carries a Zacks Rank #2 and will likely witness year-over-year earnings growth of 769.23% in first-quarter 2017. The company’s earnings per share is also expected to grow 20.8% over the next five years.
Pioneer Natural Resources Company (PXD - Free Report) – headquartered in Irving, TX – is also engaged in the E&P operations in the U.S plays. Presently, the company sports a Zacks Rank #1 and is likely to post earnings growth of 129.93% in first-quarter 2017. Moreover, earnings are projected to grow 9.7% over the coming five years.
Headquartered in Calgary, Canada, Cenovus Energy Inc. (CVE - Free Report) produces and markets oil and natural gas in Canada. The firm is projected to witness earnings growth of 6% over the next five years. During the January–March quarter of 2017, the company’s earnings are expected to have improved 105.6% year over year. Cenovus Energy also sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum Corporation (EPM - Free Report) - headquartered in Houston, TX – is involved in exploration and development of onshore oil resources in the U.S. The company carries a Zacks Rank #2 and is expected to witness year-over-year earnings growth of 850% in the first quarter.
Headquartered in Houston, TX, W&T Offshore Inc. (WTI - Free Report) exploits and develops oil resources in the Gulf of Mexico. W&T Offshore holds a Zacks Rank #2 and is expected to see year-over-year earnings growth of 113.7% in the first quarter.
Now See Our Private Investment Ideas
While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>