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Oil Stocks to Watch for Earnings on Apr 28: XOM, CVX & More
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The Q1 earnings season is in full swing with Energy bigwigs like Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) set to release financial results tomorrow.
Earnings Picture So Far
To date we have Q1 results from 181 S&P 500 members that combined account for 40% of the S&P 500 Index’s total market capitalization. According to the latest Earnings Trends report, total earnings for these companies are up 10% on 4.3% higher revenues, both on a year-over-year basis. So far, 75.7% companies delivered positive earnings surprises and 64.1% beat revenue estimates.
Prospects of the Energy Sector Look Good
As of now, the ‘Energy’ sector has made a good start this earnings cycle. For the few sector components (21.2% to be precise) on the S&P 500 Index that have reported Q1 results, total earnings surged 146.1% on 21% higher revenues. Most importantly, 71.4% of the energy companies have surpassed earnings estimates while 42.9% of the firms beat the top-line.
We expect matters to improve further and the sector is likely to clock its second consecutive positive earnings growth after eight quarters of declines.
Let's delve deeper to find out what influenced the sector’s performance this time around.
Improvement in Commodity Prices
Despite the biggest oil deal in a decade and a new pro-fossil fuel administration in the White House, crude prices declined almost 6% in the first quarter. OPEC's historic accord to trim output and rebalance the demand-supply situation have stabilized the market to a large extent. However, U.S. shale players tried to make the most of the improving oil price scenario by increasing production. With the recent uptick in U.S. shale production putting pressure on the market, oil ended the first quarter at $50.60 per barrel, down 5.8% from the 2016-end level.
Natural gas fared even worse. Price of the commodity plunged 14% in the January-March quarter, thanks to one of the mildest winters on record. A warmer winter translated into lesser requirement for the heating fuel, which in turn, upended demand forecasts.
Despite the sequential fall, however, both oil and natural gas prices are better placed than the corresponding period of 2016. In the year-ago period, crude slumped to a 12-year low while natural gas futures dropped to its worst level in almost 17 years.
Year-over-Year Gains Likely
Ending the dismal trend displayed in the past few quarters, the Oil/Energy sector finally turned the corner in the Q4 earnings season. In fact, the sector’s performance drove the overall growth of the S&P 500 Index.
The October-December quarter of 2016 turned out to be a rather good one with positives the OPEC deal and extreme weather conditions resulting in a substantial increase in oil and gas prices.
The historic OPEC production cut agreement, together with help from non-OPEC producers, saw oil prices end the year at $53.72 a barrel, up 11.4% sequentially and 45% on an annualized basis. Natural gas too advanced, with futures increasing almost 25% in Q4. Ending the year at $3.724 per million Btu (MMBtu) – up 59% from 2015 – the heating fuel gained from strong demand in a frigid winter.
As a result, following eight back-to-back quarters of earnings declines, the sector turned around in Q4 and clocked its first positive earnings growth after two years. With estimate revisions going up following OPEC’s Algeria grandstand, the Oil/Energy sector’s earnings were expected to improve handsomely from the year-ago comparable quarter.
True to the predictions, the sector came out swinging. For the sector components on the S&P 500 index, total Q4 earnings were up 17.1% on 2.0% higher revenues.
The picture is rather encouraging for the ongoing Q1 earnings season as well. This is not surprising as both oil and gas prices fell to multi-year lows in the year-ago period. In fact, the Energy sector may swing to earnings this quarter from a modest loss in the year-earlier period.
Per our analysis, the aggregate dollar amount of earnings increase for the Energy sector is the highest of all 16 Zacks sectors. This sectors is expected to earn a total of $7.7 billion in Q1 compared with a loss $1.6 billion in the year-earlier quarter. The top line is likely to show an impressive growth of 27.2% from year-earlier level. Margins are anticipated to improve 4.3%.
Stocks to Watch for Earnings on Apr 28
Let’s see what’s in store for these four energy companies that are expected to report Q1 results on Apr 28, before the opening bell.
Exxon Mobil Corporation is the world’s largest publicly traded oil company.
Last quarter, the company reported earnings of 90 cents per share that beat the Zacks Consensus Estimate of 72 cents. The quarterly earnings also increased from 67 cents per share recorded a year ago. The company beat the Zacks Consensus Estimate in three of the prior four quarters with an average positive earnings surprise of 11.91%.
A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat on earnings.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
San Ramon, CA-based Chevron Corporation is a leading integrated energy player in the world. The company’s earnings surprise history is disappointing as it had an average negative earnings surprise of 16.46% over the last four quarters.
Our proven model does not conclusively show that an earnings beat is likely for Chevron in Q1, This is because the company has a Zacks Rank #3 and an Earnings ESP of -3.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Phillips 66 (PSX - Free Report) is a leading refining player with 13 refineries, most of which are located in the U.S.
The company’s earnings surprise history is disappointing. Phillips66 – which was spun off from ConocoPhillips (COP - Free Report) on May 1, 2012 –missed the Zacks Consensus Estimate in two of the prior four quarters with an average negative earnings surprise of 14.95%.
And our model does not indicate that the company is likely to beat on earnings this time around as well, as it has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read more: What's in Store for Phillips 66 this Earnings Season?)
Valero Energy Partners LP , based in San Antonio, TX, is the owner of refined petroleum products pipelines and logistics properties in the U.S.
Although the company posted an average positive earnings surprise history of 3.30% over the prior four quarters, our model does not indicate that the company is likely to beat on earnings this time around. The company has Earnings ESP of -2.74% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public. Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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Oil Stocks to Watch for Earnings on Apr 28: XOM, CVX & More
The Q1 earnings season is in full swing with Energy bigwigs like Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) set to release financial results tomorrow.
Earnings Picture So Far
To date we have Q1 results from 181 S&P 500 members that combined account for 40% of the S&P 500 Index’s total market capitalization. According to the latest Earnings Trends report, total earnings for these companies are up 10% on 4.3% higher revenues, both on a year-over-year basis. So far, 75.7% companies delivered positive earnings surprises and 64.1% beat revenue estimates.
Prospects of the Energy Sector Look Good
As of now, the ‘Energy’ sector has made a good start this earnings cycle. For the few sector components (21.2% to be precise) on the S&P 500 Index that have reported Q1 results, total earnings surged 146.1% on 21% higher revenues. Most importantly, 71.4% of the energy companies have surpassed earnings estimates while 42.9% of the firms beat the top-line.
We expect matters to improve further and the sector is likely to clock its second consecutive positive earnings growth after eight quarters of declines.
Let's delve deeper to find out what influenced the sector’s performance this time around.
Improvement in Commodity Prices
Despite the biggest oil deal in a decade and a new pro-fossil fuel administration in the White House, crude prices declined almost 6% in the first quarter. OPEC's historic accord to trim output and rebalance the demand-supply situation have stabilized the market to a large extent. However, U.S. shale players tried to make the most of the improving oil price scenario by increasing production. With the recent uptick in U.S. shale production putting pressure on the market, oil ended the first quarter at $50.60 per barrel, down 5.8% from the 2016-end level.
Natural gas fared even worse. Price of the commodity plunged 14% in the January-March quarter, thanks to one of the mildest winters on record. A warmer winter translated into lesser requirement for the heating fuel, which in turn, upended demand forecasts.
Despite the sequential fall, however, both oil and natural gas prices are better placed than the corresponding period of 2016. In the year-ago period, crude slumped to a 12-year low while natural gas futures dropped to its worst level in almost 17 years.
Year-over-Year Gains Likely
Ending the dismal trend displayed in the past few quarters, the Oil/Energy sector finally turned the corner in the Q4 earnings season. In fact, the sector’s performance drove the overall growth of the S&P 500 Index.
The October-December quarter of 2016 turned out to be a rather good one with positives the OPEC deal and extreme weather conditions resulting in a substantial increase in oil and gas prices.
The historic OPEC production cut agreement, together with help from non-OPEC producers, saw oil prices end the year at $53.72 a barrel, up 11.4% sequentially and 45% on an annualized basis. Natural gas too advanced, with futures increasing almost 25% in Q4. Ending the year at $3.724 per million Btu (MMBtu) – up 59% from 2015 – the heating fuel gained from strong demand in a frigid winter.
As a result, following eight back-to-back quarters of earnings declines, the sector turned around in Q4 and clocked its first positive earnings growth after two years. With estimate revisions going up following OPEC’s Algeria grandstand, the Oil/Energy sector’s earnings were expected to improve handsomely from the year-ago comparable quarter.
True to the predictions, the sector came out swinging. For the sector components on the S&P 500 index, total Q4 earnings were up 17.1% on 2.0% higher revenues.
The picture is rather encouraging for the ongoing Q1 earnings season as well. This is not surprising as both oil and gas prices fell to multi-year lows in the year-ago period. In fact, the Energy sector may swing to earnings this quarter from a modest loss in the year-earlier period.
Per our analysis, the aggregate dollar amount of earnings increase for the Energy sector is the highest of all 16 Zacks sectors. This sectors is expected to earn a total of $7.7 billion in Q1 compared with a loss $1.6 billion in the year-earlier quarter. The top line is likely to show an impressive growth of 27.2% from year-earlier level. Margins are anticipated to improve 4.3%.
Stocks to Watch for Earnings on Apr 28
Let’s see what’s in store for these four energy companies that are expected to report Q1 results on Apr 28, before the opening bell.
Exxon Mobil Corporation is the world’s largest publicly traded oil company.
Last quarter, the company reported earnings of 90 cents per share that beat the Zacks Consensus Estimate of 72 cents. The quarterly earnings also increased from 67 cents per share recorded a year ago. The company beat the Zacks Consensus Estimate in three of the prior four quarters with an average positive earnings surprise of 11.91%.
Our model shows that Exxon Mobil is likely to beat on earnings this time around. This is because Exxon Mobil has an Earnings ESP of +1.18% and a Zacks Rank #3 (Hold) (Read more: ExxonMobil May Beat on Q1 Earnings: Stock to Gain?).
A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 to beat on earnings.
Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Exxon Mobil Corporation Price and EPS Surprise
Exxon Mobil Corporation Price and EPS Surprise | Exxon Mobil Corporation Quote
San Ramon, CA-based Chevron Corporation is a leading integrated energy player in the world. The company’s earnings surprise history is disappointing as it had an average negative earnings surprise of 16.46% over the last four quarters.
Our proven model does not conclusively show that an earnings beat is likely for Chevron in Q1, This is because the company has a Zacks Rank #3 and an Earnings ESP of -3.53%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Chevron Corporation Price and EPS Surprise
Chevron Corporation Price and EPS Surprise | Chevron Corporation Quote
Phillips 66 (PSX - Free Report) is a leading refining player with 13 refineries, most of which are located in the U.S.
The company’s earnings surprise history is disappointing. Phillips66 – which was spun off from ConocoPhillips (COP - Free Report) on May 1, 2012 –missed the Zacks Consensus Estimate in two of the prior four quarters with an average negative earnings surprise of 14.95%.
And our model does not indicate that the company is likely to beat on earnings this time around as well, as it has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read more: What's in Store for Phillips 66 this Earnings Season?)
Phillips 66 Price and EPS Surprise
Phillips 66 Price and EPS Surprise | Phillips 66 Quote
Valero Energy Partners LP , based in San Antonio, TX, is the owner of refined petroleum products pipelines and logistics properties in the U.S.
Although the company posted an average positive earnings surprise history of 3.30% over the prior four quarters, our model does not indicate that the company is likely to beat on earnings this time around. The company has Earnings ESP of -2.74% with a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Valero Energy Partners LP Price and EPS Surprise
Valero Energy Partners LP Price and EPS Surprise | Valero Energy Partners LP Quote
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public. Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>