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Can EOG Resources (EOG) Keep Its Earnings Streak Alive in Q4?

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EOG Resources, Inc. (EOG - Free Report) is expected to release fourth-quarter 2017 results on Feb 28.

Last quarter, this upstream energy player delivered a positive earnings surprise of 90%. In the last four quarters, the company’s average surprise was a positive 40.9%. Let’s see how things are shaping up for this announcement.

Which Way Are Estimates Treading?

Let’s look at the estimate revision trend in order to get a clear picture of what analysts expect from the upcoming release.

The Zacks Consensus Estimate for fourth-quarter earnings of 52 cents has remained unchanged over the last seven days. This represents a year-over-year earnings plunge of 5,300%.

Further, analysts polled by Zacks expect revenues of $3,026 million for the quarter, up almost 26% from the year-ago quarter. 

Why a Likely Positive Surprise?

Our proven model shows that EOG Resources is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.92%. This is a very meaningful and leading indicator of a likely positive earnings surprise for shares. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: EOG Resources sports a Zacks Rank #1 (Strong Buy), which when combined with +1.92% ESP makes us confident of a positive earnings surprise.

Note that stocks with a Zacks Ranks #1, 2 (Buy) or 3 (Hold) have a significantly higher chance of beating earnings. Meanwhile, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement. 

What Is Driving the Better-Than-Expected Earnings?

The Zacks Consensus Estimate for total Crude Oil and Condensate Volumes is pegged at 370 thousand barrels per day (MBbl/d) — within the company’s projected range of 362.5-370.7 MBbl/d, higher than last quarter’s 328 MBbl/d and year-ago quarter’s 312 MBbl/d. The Zacks Consensus Estimate for Average Crude Oil and Condensate Prices (Composite) is $54 per barrel, above last quarter’s $48.11 per barrel and the year-ago quarter’s $47.76 per barrel.   

The Zacks Consensus Estimate for total Natural Gas Liquids Volumes is 88 MBbl/d, higher than the year-ago 81 MBbl/d and preceding quarter’s 87 MBbl/d. The Zacks Consensus Estimate for Average Natural Gas Liquids Prices (Composite) is $21.77 per barrel, higher than the year-ago quarter’s $18.51 per barrel.   

The Zacks Consensus Estimate for Average Natural Gas Prices (Composite) is $2.23 per thousand cubic feet (Mcf), higher than the year-ago quarter’s $2.04 per Mcf.

Moreover, the Zacks Consensus Estimate for total production is 60 million barrels of oil equivalent (MMBoe), higher than last quarter’s 55 MMBoe and the year-ago quarter’s 53.7 MMBoe.

Hence, we expect the company to report healthy Q4 numbers on the back of higher realized commodity prices and production.

Other Stocks to Consider

Here are a few companies which, per our model, have the right combination of elements to post an earnings beat this quarter: 

WildHorse Resource Development Corporation , based in Houston, TX, is an upstream energy player. It has an Earnings ESP of +5.26% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.  

Houston, TX-based Oasis Petroleum Inc. is also an oil explorer with an Earnings ESP of +14.28% and a Zacks Rank of 2.

Dallas, TX-based RSP Permian, Inc. is an upstream energy company with an Earnings ESP of + 0.74%. It is a Zacks #3 Ranked player.

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