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What's in Store for Apache (APA) this Earnings Season?
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Domestic energy explorer Apache Corp. (APA - Free Report) is set to release first-quarter 2017 results, before the opening bell on Thursday, May 4.
In the preceding three-month period, the Houston, TX-based company reported adjusted loss per share of 6 cents, which compared unfavorably with the Zacks Consensus Estimate of earnings of 6 cents. The underperformance stemmed from a decline in output due to a conservative capital budget.
Apache’s earnings surprise history is disappointing. The company missed estimates in two of the last four quarters with an average negative surprise of 19.89%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Compared with year-earlier quarter, the pricing scenario of oil was much better during the first quarter, courtesy of the historic OPEC production cut agreement. Natural gas prices too improved from the January–March quarter of 2016.
Undoubtedly, these factors were favorable for oil and gas exploration players like Apache as the company was able to sell the commodities at higher prices. Moreover, the company is expected to report an increase in first-quarter production. This is due to the resurgence of shale players in the U.S oil and gas patches as evidenced by the increasing rig count data of Baker Hughes Inc. .
However, the company’s debt picture is slightly discouraging. Debt-to-capitalization ratio of Apache is 52.7%, which is higher than 51.9% for the Zacks categorized Oil & Gas-U.S Exploration & Production industry.
Q1 Price Performance
Apache’s share price performance of during January–March quarter of this year was disappointing. During the period, the company’s shares underperformed the Oil & Gas-U.S Exploration & Production industry. Shares lost 19% compared with 11% decrease for the broader industry.
Earnings Whispers
Our proven model does not conclusively show that Apache 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 -11.11%. This is because the Most Accurate estimate stands at 16 cents, while the Zacks Consensus Estimate is pegged higher at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Apache has a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, a negative Earnings ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for Apache, here are some energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements for an earnings beat this quarter:
Cimarex Energy Co. has an Earnings ESP of +1.19% and a Zacks Rank #3. The firm is expected to release earnings on May 8.
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Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>
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What's in Store for Apache (APA) this Earnings Season?
Domestic energy explorer Apache Corp. (APA - Free Report) is set to release first-quarter 2017 results, before the opening bell on Thursday, May 4.
In the preceding three-month period, the Houston, TX-based company reported adjusted loss per share of 6 cents, which compared unfavorably with the Zacks Consensus Estimate of earnings of 6 cents. The underperformance stemmed from a decline in output due to a conservative capital budget.
Apache’s earnings surprise history is disappointing. The company missed estimates in two of the last four quarters with an average negative surprise of 19.89%.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Compared with year-earlier quarter, the pricing scenario of oil was much better during the first quarter, courtesy of the historic OPEC production cut agreement. Natural gas prices too improved from the January–March quarter of 2016.
Undoubtedly, these factors were favorable for oil and gas exploration players like Apache as the company was able to sell the commodities at higher prices. Moreover, the company is expected to report an increase in first-quarter production. This is due to the resurgence of shale players in the U.S oil and gas patches as evidenced by the increasing rig count data of Baker Hughes Inc. .
However, the company’s debt picture is slightly discouraging. Debt-to-capitalization ratio of Apache is 52.7%, which is higher than 51.9% for the Zacks categorized Oil & Gas-U.S Exploration & Production industry.
Q1 Price Performance
Apache’s share price performance of during January–March quarter of this year was disappointing. During the period, the company’s shares underperformed the Oil & Gas-U.S Exploration & Production industry. Shares lost 19% compared with 11% decrease for the broader industry.
Earnings Whispers
Our proven model does not conclusively show that Apache 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 -11.11%. This is because the Most Accurate estimate stands at 16 cents, while the Zacks Consensus Estimate is pegged higher at 18 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Apache has a Zacks Rank #3. Though a Zacks Rank #3 increases the predictive power of ESP, a negative Earnings ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for Apache, here are some energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements for an earnings beat this quarter:
Chesapeake Energy Corp. (CHK - Free Report) has an Earnings ESP of +5.26% and a Zacks Rank #3. The company is expected to release earnings on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cimarex Energy Co. has an Earnings ESP of +1.19% and a Zacks Rank #3. The firm is expected to release earnings on May 8.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>