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Is it Worth Holding ConocoPhillips (COP) in Your Portfolio?
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We issued an updated research report on upstream energy company ConocoPhillips (COP - Free Report) on Apr 18, 2017. ConocoPhillips is one of the largest exploration and production players in the world, based on proved reserves and production. However, we remain on the sidelines as volatile commodity prices continue to be overhang on the stock.
ConocoPhillips entered into a definitive agreement to divest its interest in the natural gas rich San Juan Basin for almost $3 billion. The company’s stake in the basin (spanning across 1.3 million acres of land from Colorado to New Mexico) could garner $2.7 billion in cash. The accord reflects ConocoPhillips’ intention to lower its exposure to the U.S. natural gas business, which has been less profitable in the previous years. Most importantly, proceeds from the deal should strengthen the company’s balance sheet and generate considerable cash flows for shareholders.
Following the OPEC deal to curb oil production in last November, the commodity recovered significantly from historical lows it slipped to during mid-Feb 2016. As an upstream energy firm, ConocoPhillips will be able to earn more cash flows after selling crude at higher prices.
Moreover, ConocoPhillips’ share price chart shows significant strength. The stock has gained 17.3% over the last six months compared with the 10.4% decrease registered by the Zacks categorized Oil & Gas – U.S. Exploration & Production industry.
However, ConocoPhillips anticipates production in the range of 1,540–1,580 MBOED for first-quarter 2017. This is much lower than 1,599 MBOED produced during the prior-year comparable period. The company’s lower output guidance, especiallywhen oil is trading above the physiological mark of $50 per barrel, raises concerns.
On top of that, ConocoPhillips’ debt balance was $27.3 billion compared with a cash balance of $3.6 million at the end of fourth-quarter 2016. The company’s debt-to-equity ratio was 77.4% compared with the broader industry average of 107.9%. The company’s high leverage is a cause of concern.
Stocks to Consider
Some better-ranked players in the same space are Antero Resources Corporation (AR - Free Report) , W&T Offshore Inc. (WTI - Free Report) and Concho Resources Inc. . Antero Resources and W&T Offshore sport a Zacks Rank #1 (Strong Buy), while Concho carries a Zacks Rank #2 (Buy).
Antero Resources beat the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 239.10%.
W&T Offshore posted an average positive earnings surprise of 50.53% over the last four quarters.
Concho is expected to post year-over-year earnings growth of 72.2% for 2017.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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Is it Worth Holding ConocoPhillips (COP) in Your Portfolio?
We issued an updated research report on upstream energy company ConocoPhillips (COP - Free Report) on Apr 18, 2017. ConocoPhillips is one of the largest exploration and production players in the world, based on proved reserves and production. However, we remain on the sidelines as volatile commodity prices continue to be overhang on the stock.
As a result, the company carries a Zacks Rank #3 (Hold), implying that the stock will perform in line with the broader U.S. equity market over the next one to three months.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ConocoPhillips entered into a definitive agreement to divest its interest in the natural gas rich San Juan Basin for almost $3 billion. The company’s stake in the basin (spanning across 1.3 million acres of land from Colorado to New Mexico) could garner $2.7 billion in cash. The accord reflects ConocoPhillips’ intention to lower its exposure to the U.S. natural gas business, which has been less profitable in the previous years. Most importantly, proceeds from the deal should strengthen the company’s balance sheet and generate considerable cash flows for shareholders.
Following the OPEC deal to curb oil production in last November, the commodity recovered significantly from historical lows it slipped to during mid-Feb 2016. As an upstream energy firm, ConocoPhillips will be able to earn more cash flows after selling crude at higher prices.
Moreover, ConocoPhillips’ share price chart shows significant strength. The stock has gained 17.3% over the last six months compared with the 10.4% decrease registered by the Zacks categorized Oil & Gas – U.S. Exploration & Production industry.
However, ConocoPhillips anticipates production in the range of 1,540–1,580 MBOED for first-quarter 2017. This is much lower than 1,599 MBOED produced during the prior-year comparable period. The company’s lower output guidance, especially when oil is trading above the physiological mark of $50 per barrel, raises concerns.
On top of that, ConocoPhillips’ debt balance was $27.3 billion compared with a cash balance of $3.6 million at the end of fourth-quarter 2016. The company’s debt-to-equity ratio was 77.4% compared with the broader industry average of 107.9%. The company’s high leverage is a cause of concern.
Stocks to Consider
Some better-ranked players in the same space are Antero Resources Corporation (AR - Free Report) , W&T Offshore Inc. (WTI - Free Report) and Concho Resources Inc. . Antero Resources and W&T Offshore sport a Zacks Rank #1 (Strong Buy), while Concho carries a Zacks Rank #2 (Buy).
Antero Resources beat the Zacks Consensus Estimate in each of the trailing four quarters with an average surprise of 239.10%.
W&T Offshore posted an average positive earnings surprise of 50.53% over the last four quarters.
Concho is expected to post year-over-year earnings growth of 72.2% for 2017.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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