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Can Price and Output Gains Boost Cabot's (COG) Q4 Earnings?
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Cabot Oil & Gas Corporation is set to report fourth-quarter 2017 results before the opening bell on Feb 23.
Headquartered in Texas, Cabot is an independent oil and gas exploration company with producing properties mainly in the continental United States. Last quarter, the company reported a negative earnings surprise of 12.50% amid high costs, weaker-than-expected production and lower-than-expected natural gas price realizations. Coming to earnings surprise history, Cabot displays a dismal performance, delivering average negative earnings surprise of 0.11% in the trailing four quarters.
Cabot Oil & Gas Corporation Price and EPS Surprise
Let’s see how things are shaping up prior to the announcement.
Which Way Are Estimates Headed?
Let’s look at the estimate revision trend to get a clear picture of what analysts expect from the earnings release.
The Zacks Consensus Estimate for fourth-quarter earnings of 12 cents has been revised upward by a penny in the last seven days. It reflects massive growth from the year-ago quarter’s earnings of a penny.
Further, analysts polled by Zacks expect revenues of $426 million for the quarter, up 34.8% from the prior-year quarter.
Factors at Play
The upstream player is poised to benefit from recovering energy landscape. The Zacks Consensus Estimate for average realized gas price is pegged at $2.46 per thousand cubic feet, higher than the prior-quarter figure of $1.94. Cabot being one of the most gas-weighted E&Ps is likely to gain from the recovering natural gas prices. Even the crude price realization is estimated at $48.61 per barrel, higher than $42.94 per barrel recorded in fourth-quarter 2016.
Further, the company is focused on streamlining its portfolio to increase focus toward high income-generating core assets. Cabot's exposure to the high quality Marcellus assets will help it to achieve industry leading rates of return. The low-risk and high margin inventories of the company boost its production prospects and revenues in the coming quarters.
The Zacks Consensus Estimate for the quarterly natural gas output stands at 166 billion cubic feet (Bcf) compared with $159 Bcf in fourth-quarter 2016. In fact, the Zacks Consensus Estimate for operating revenues from natural gas production stands at $408 million against $312 million recorded in the year-ago quarter. Further, operating revenues from crude production is also estimated at $62 million, higher than $36.5 million reported in the prior-year quarter.
While Cabot is bearing the brunt of increased total expenses since past two quarters, we believe that pricing and production gains will offset the effect of high costs, enabling the company to deliver stronger results this quarter.
What the Zacks Model Unveils
Our proven model too shows that Cabot is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.
Zacks ESP: The company has an Earnings ESP of +7.44%. This is because the Most Accurate estimate is pegged at 13 cents, while the Zacks Consensus Estimate is at 12 cents. A favorable ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cabot carries a Zacks Rank #1 (Strong Buy) which, when combined with a positive ESP, makes us confident of an earnings beat.
Note that stocks with Zacks Ranks #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings estimates. On the other hand, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Energy Stocks With Favorable Combination
Cabot is not the only energy firm looking up this earnings season. Here are some companies from the same space which, according to our model, also have the right combination of elements to post an earnings beat this quarter:
Keane Group, Inc. has an Earnings ESP of +5.36% and a Zacks Rank #3. The company is likely to release fourth-quarter earnings on Feb 26.
RSP Permian, Inc. has an Earnings ESP of +1.64%. It is a Zacks #3 Ranked player and is expected to unveil fourth-quarter earnings on Feb 27.
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Image: Bigstock
Can Price and Output Gains Boost Cabot's (COG) Q4 Earnings?
Cabot Oil & Gas Corporation is set to report fourth-quarter 2017 results before the opening bell on Feb 23.
Headquartered in Texas, Cabot is an independent oil and gas exploration company with producing properties mainly in the continental United States. Last quarter, the company reported a negative earnings surprise of 12.50% amid high costs, weaker-than-expected production and lower-than-expected natural gas price realizations. Coming to earnings surprise history, Cabot displays a dismal performance, delivering average negative earnings surprise of 0.11% in the trailing four quarters.
Cabot Oil & Gas Corporation Price and EPS Surprise
Cabot Oil & Gas Corporation Price and EPS Surprise | Cabot Oil & Gas Corporation Quote
Let’s see how things are shaping up prior to the announcement.
Which Way Are Estimates Headed?
Let’s look at the estimate revision trend to get a clear picture of what analysts expect from the earnings release.
The Zacks Consensus Estimate for fourth-quarter earnings of 12 cents has been revised upward by a penny in the last seven days. It reflects massive growth from the year-ago quarter’s earnings of a penny.
Further, analysts polled by Zacks expect revenues of $426 million for the quarter, up 34.8% from the prior-year quarter.
Factors at Play
The upstream player is poised to benefit from recovering energy landscape. The Zacks Consensus Estimate for average realized gas price is pegged at $2.46 per thousand cubic feet, higher than the prior-quarter figure of $1.94. Cabot being one of the most gas-weighted E&Ps is likely to gain from the recovering natural gas prices. Even the crude price realization is estimated at $48.61 per barrel, higher than $42.94 per barrel recorded in fourth-quarter 2016.
Further, the company is focused on streamlining its portfolio to increase focus toward high income-generating core assets. Cabot's exposure to the high quality Marcellus assets will help it to achieve industry leading rates of return. The low-risk and high margin inventories of the company boost its production prospects and revenues in the coming quarters.
The Zacks Consensus Estimate for the quarterly natural gas output stands at 166 billion cubic feet (Bcf) compared with $159 Bcf in fourth-quarter 2016. In fact, the Zacks Consensus Estimate for operating revenues from natural gas production stands at $408 million against $312 million recorded in the year-ago quarter. Further, operating revenues from crude production is also estimated at $62 million, higher than $36.5 million reported in the prior-year quarter.
While Cabot is bearing the brunt of increased total expenses since past two quarters, we believe that pricing and production gains will offset the effect of high costs, enabling the company to deliver stronger results this quarter.
What the Zacks Model Unveils
Our proven model too shows that Cabot is likely to beat earnings in the to-be-reported quarter because it has the right combination of two key ingredients.
Zacks ESP: The company has an Earnings ESP of +7.44%. This is because the Most Accurate estimate is pegged at 13 cents, while the Zacks Consensus Estimate is at 12 cents. A favorable ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cabot carries a Zacks Rank #1 (Strong Buy) which, when combined with a positive ESP, makes us confident of an earnings beat.
Note that stocks with Zacks Ranks #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings estimates. On the other hand, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
Energy Stocks With Favorable Combination
Cabot is not the only energy firm looking up this earnings season. Here are some companies from the same space which, according to our model, also have the right combination of elements to post an earnings beat this quarter:
EOG Resources (EOG - Free Report) has an Earnings ESP of +3.61% and a Zacks Rank of 1. The company is scheduled to release fourth-quarter earnings on Feb 27. You can see the complete list of today’s Zacks #1 Rank stocks here.
Keane Group, Inc. has an Earnings ESP of +5.36% and a Zacks Rank #3. The company is likely to release fourth-quarter earnings on Feb 26.
RSP Permian, Inc. has an Earnings ESP of +1.64%. It is a Zacks #3 Ranked player and is expected to unveil fourth-quarter earnings on Feb 27.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>