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Oil Stocks to Watch for Earnings on May 8: EOG, XEC & More
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We are more than halfway through the Q1 earnings season, with 78.2% S&P 500 members having reported results as of May 3.
Earnings Picture So Far
To date, we have Q1 results from 358 S&P 500 members that combined account for 78.2% of the S&P 500 Index’s total market capitalization. According to the latest Earnings Trends report, total earnings for these companies are up 12.9% on 7.9% higher revenues, both on a year-over-year basis. So far, 74.3% companies delivered positive earnings surprises and 65.9% beat revenue estimates.
Energy Sector Prospects Look Good
The ‘Energy’ sector has made a good start this earnings cycle. For the few sector components (63.6% to be precise) on the S&P 500 Index that have reported Q1 results, total revenue surged 33.1%. Most importantly, 71.4% of the energy companies have surpassed earnings estimates while 61.9% of the firms beat expectations on the top-line front.
Let's delve deeper to find out what influenced the sector’s performance this time around.
Improvement in Commodity Prices from Historic Lows
Despite the biggest oil deal in a decade and a 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 restore demand-supply balance 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 surge 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, in turn, upending demand forecasts.
Despite the sequential fall, 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 of the past few quarters, Oil/Energy sector finally turned the corner in the Q4 earnings season driving the aggregate growth picture for the S&P 500 Index.
The October–December quarter of 2016 turned out to be a rather good one with the OPEC deal and extreme weather conditions supporting a hefty rise in oil and gas prices during the fourth quarter.
A 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% year over year. Meanwhile, natural gas too displayed improvement with futures jumping approximately 25%, just in the fourth quarter. Ending the year at $3.724 per million Btu (MMBtu) – up 59% from 2015 – the heating fuel benefited from a cold snap that translated into a strong demand.
As a result, following eight back-to-back quarters of earnings declines, the sector turned around in 4Q16 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 4Q15 levels.
True to 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 looks rather encouraging for the ongoing Q1 earnings season as well. This is not surprising as both oil and gas fell to multi-year lows in the year-ago period. In fact, the Energy sector is set to turn around from a modest loss in the year-earlier period to improving positive earnings this quarter.
Per our analysis, the Energy sector is anticipated to earn a total of $9 billion in Q1 comparing favorably with a loss $1.6 billion in the year-earlier quarter. The top line is likely to show impressive growth of 31.6% from 1Q16 levels, while margins are set to improve 5.1%.
Stocks to Watch for Earnings on May 8
Let’s see what’s in store for these five energy companies that are expected to report Q1 results on May 8.
EOG Resources Inc. (EOG - Free Report) – one of the leading upstream energy players – is expected to report financial results, after the market closes.
Last quarter, the company posted a positive earnings surprise of 93.75%. In the last four quarters, the company’s average earnings surprise was a positive 22.94%.
Our model does not indicate that EOG Resources is likely to beat on earnings this time around too. This 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 beat on earnings.
EOG Resources currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% Earnings ESP complicates our surprise prediction. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
As it is, 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.
Denver, CO-based Cimarex Energy Company will report its quarterly results before the market opens.
Cimarex Energy’s earnings surprise history is impressive as it outperformed estimates in three of the last four quarters.
Our proven model shows that the company is likely to beat on earnings in the to-be-reported quarter. This is because it has an Earnings ESP of +1.18% and Zacks Rank #3.
San Antonio, TX-based Tesoro Corporation – an independent refiner and marketer of refined petroleum products in the western U.S – is expected to report its financials after the market closes.
Although Tesoro surpassed the Zacks Consensus Estimate in all the prior four quarters, our model does not show that the company is likely to beat on earnings this quarter. This is because Tesoro has Earnings ESP of 0.00% and a Zacks Rank #3.
Houston, TX-based Plains All American Pipeline LP (PAA - Free Report) is involved in the transportation, storage, terminaling and marketing of crude oil, natural gas, natural gas liquids (NGL) and refined products in the U.S. and Canada. The company is expected to report earnings after the closing bell.
The partnership had an average negative earnings surprise of 193.18% for the last four quarters. Our proven model does not show that the partnership is likely to beat on earnings in the to-be-reported quarter. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Plains All American Pipeline, L.P. Price and EPS Surprise
Antero Midstream Partners LP (AM - Free Report) – headquartered in Denver, CO – is anticipated to report earnings after the closing bell.
The partnership managed to beat the Zacks Consensus Estimate in all the previous four quarters with an average positive earnings surprise of 7.54%. Our proven model does not show that the partnership is likely to beat on earnings in the to-be-reported quarter. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Midstream Partners LP Price and EPS Surprise
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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.
Image: Bigstock
Oil Stocks to Watch for Earnings on May 8: EOG, XEC & More
We are more than halfway through the Q1 earnings season, with 78.2% S&P 500 members having reported results as of May 3.
Earnings Picture So Far
To date, we have Q1 results from 358 S&P 500 members that combined account for 78.2% of the S&P 500 Index’s total market capitalization. According to the latest Earnings Trends report, total earnings for these companies are up 12.9% on 7.9% higher revenues, both on a year-over-year basis. So far, 74.3% companies delivered positive earnings surprises and 65.9% beat revenue estimates.
Energy Sector Prospects Look Good
The ‘Energy’ sector has made a good start this earnings cycle. For the few sector components (63.6% to be precise) on the S&P 500 Index that have reported Q1 results, total revenue surged 33.1%. Most importantly, 71.4% of the energy companies have surpassed earnings estimates while 61.9% of the firms beat expectations on the top-line front.
Let's delve deeper to find out what influenced the sector’s performance this time around.
Improvement in Commodity Prices from Historic Lows
Despite the biggest oil deal in a decade and a 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 restore demand-supply balance 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 surge 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, in turn, upending demand forecasts.
Despite the sequential fall, 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 of the past few quarters, Oil/Energy sector finally turned the corner in the Q4 earnings season driving the aggregate growth picture for the S&P 500 Index.
The October–December quarter of 2016 turned out to be a rather good one with the OPEC deal and extreme weather conditions supporting a hefty rise in oil and gas prices during the fourth quarter.
A 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% year over year. Meanwhile, natural gas too displayed improvement with futures jumping approximately 25%, just in the fourth quarter. Ending the year at $3.724 per million Btu (MMBtu) – up 59% from 2015 – the heating fuel benefited from a cold snap that translated into a strong demand.
As a result, following eight back-to-back quarters of earnings declines, the sector turned around in 4Q16 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 4Q15 levels.
True to 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 looks rather encouraging for the ongoing Q1 earnings season as well. This is not surprising as both oil and gas fell to multi-year lows in the year-ago period. In fact, the Energy sector is set to turn around from a modest loss in the year-earlier period to improving positive earnings this quarter.
Per our analysis, the Energy sector is anticipated to earn a total of $9 billion in Q1 comparing favorably with a loss $1.6 billion in the year-earlier quarter. The top line is likely to show impressive growth of 31.6% from 1Q16 levels, while margins are set to improve 5.1%.
Stocks to Watch for Earnings on May 8
Let’s see what’s in store for these five energy companies that are expected to report Q1 results on May 8.
EOG Resources Inc. (EOG - Free Report) – one of the leading upstream energy players – is expected to report financial results, after the market closes.
Last quarter, the company posted a positive earnings surprise of 93.75%. In the last four quarters, the company’s average earnings surprise was a positive 22.94%.
Our model does not indicate that EOG Resources is likely to beat on earnings this time around too. This 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 beat on earnings.
EOG Resources currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% Earnings ESP complicates our surprise prediction. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
As it is, 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.
EOG Resources, Inc. Price and EPS Surprise
EOG Resources, Inc. Price and EPS Surprise | EOG Resources, Inc. Quote
Denver, CO-based Cimarex Energy Company will report its quarterly results before the market opens.
Cimarex Energy’s earnings surprise history is impressive as it outperformed estimates in three of the last four quarters.
Our proven model shows that the company is likely to beat on earnings in the to-be-reported quarter. This is because it has an Earnings ESP of +1.18% and Zacks Rank #3.
Cimarex Energy Co Price and EPS Surprise
Cimarex Energy Co Price and EPS Surprise | Cimarex Energy Co Quote
San Antonio, TX-based Tesoro Corporation – an independent refiner and marketer of refined petroleum products in the western U.S – is expected to report its financials after the market closes.
Although Tesoro surpassed the Zacks Consensus Estimate in all the prior four quarters, our model does not show that the company is likely to beat on earnings this quarter. This is because Tesoro has Earnings ESP of 0.00% and a Zacks Rank #3.
Tesoro Corporation Price and EPS Surprise
Tesoro Corporation Price and EPS Surprise | Tesoro Corporation Quote
Houston, TX-based Plains All American Pipeline LP (PAA - Free Report) is involved in the transportation, storage, terminaling and marketing of crude oil, natural gas, natural gas liquids (NGL) and refined products in the U.S. and Canada. The company is expected to report earnings after the closing bell.
The partnership had an average negative earnings surprise of 193.18% for the last four quarters. Our proven model does not show that the partnership is likely to beat on earnings in the to-be-reported quarter. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3.
Plains All American Pipeline, L.P. Price and EPS Surprise
Plains All American Pipeline, L.P. Price and EPS Surprise | Plains All American Pipeline, L.P. Quote
Antero Midstream Partners LP (AM - Free Report) – headquartered in Denver, CO – is anticipated to report earnings after the closing bell.
The partnership managed to beat the Zacks Consensus Estimate in all the previous four quarters with an average positive earnings surprise of 7.54%. Our proven model does not show that the partnership is likely to beat on earnings in the to-be-reported quarter. This is because it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Midstream Partners LP Price and EPS Surprise
Antero Midstream Partners LP Price and EPS Surprise | Antero Midstream Partners LP Quote
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.
See This Ticker Free >>