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Why Is ConocoPhillips (COP) Down 5.1% Since the Last Earnings Report?

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A month has gone by since the last earnings report for ConocoPhillips (COP - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

ConocoPhillips Incurs Q1 Loss, Revenues Beat Estimates

ConocoPhillips reported first-quarter 2017 adjusted loss of $0.02 per share that compared unfavorably with the Zacks Consensus Estimate of earnings of $0.01. Higher expenses along with normal field declines and dispositions resulted in the quarterly loss.

The quarterly loss, however, was narrower than the year-ago quarter adjusted loss of $0.95 per share owing to improved commodity price realizations and increased production.

Revenues of $7,771 million beat the Zacks Consensus Estimate of $7,473 million. The top line also improved from $5,015 million in the year-ago quarter.

Exploration and Production

Production from continuing operations averaged 1,593 million barrels of oil equivalent (MMBOE) in the quarter as against 1,578 MMBOE in the year-ago quarter. The improvement can be attributed to the ramp up of production from key developments and higher performance from well operations.

Price Realization

Average realized price for oil was $50.97 per barrel compared with $31.47 in the year-earlier quarter. Natural gas liquids were sold at $24.87 per barrel as against $12.30 a year ago. The price of natural gas was $3.84 per thousand cubic feet compared with $2.99 in first-quarter 2016.   

Financials

As of Mar 31, 2017, the company had total cash and cash equivalents of $3.1 billion and debt of $26.4 billion, with a debt-to-capitalization ratio of 42%. In the reported quarter, ConocoPhillips generated cash of $1.8 billion from operating activities. The company spent $948 million for capital expenditures and investments and paid dividends of $331 million.

Total Expense

The company reported expenses of $8 billion in the first quarter as against $7.3 billion in the January–March quarter of 2016.

Guidance

ConocoPhillips' second-quarter 2017 production guidance is in the range of 1,495–1,535 MBOED, excluding production from Libya.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.

ConocoPhillips Price and Consensus

 

VGM Scores

At this time, the stock has a strong Growth Score of 'A', though it is lagging a bit on the momentum front with an 'D'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for growth based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.


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