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Cabot Oil & Gas (COG) Q1 Earnings: What's in the Cards?

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Cabot Oil & Gas Corporation is set to release first-quarter 2018 results before the opening bell on Apr 27.

The company is an upstream energy entity, which delivered an average positive earnings surprise of 2% in the trailing four quarters, missing estimates on two occasions.

Let’s see, how things are shaping up for this Houston, TX-based Cabot Oil & Gas prior to the earnings announcement.

Which Way are Estimates Trending?

Let’s take a look at the estimate revisions to draw a clear picture of analysts’ thoughts on the company before earnings release.

The Zacks Consensus Estimate of 27 cents for the first quarter has seen two upward and one downward revision by firms in the last 60 days, reflecting year-over-year growth of about 42.1%.

Further, analysts polled by Zacks expect revenues of $463.8 million in the upcoming results, representing a 10.4% decline from the year-ago quarter.

Factors at Play

The Zacks Consensus Estimate for first-quarter total equivalent production is 167 billion cubic feet equivalent (Bcfe), lower than 170.1 Bcfe in the year-ago period. Analysts polled by Zacks anticipate total natural gas production to be 162 billion cubic feet (Bcf), 1.2% down year over year. Moreover, the Zacks Consensus Estimate for crude oil and condensate production is 703 thousand barrels (MBbl), down 43.2% sequentially and 23.7% year over year.

Additionally, the consensus mark for average natural gas sales price (including hedging) per thousand cubic feet is $2.50, down from $2.64 in the year-earlier quarter but up from $2.18 reported last quarter. The consensus estimate for crude oil and condensate price (including hedging) is pegged at $56 per barrel, up from $46.73 in first-quarter 2017 and marginally up from $55 in the fourth quarter of 2017. Revenues from operations will likely decline in the to-be-reported quarter compared with year-ago period due to lower equivalent production and an estimated decline in gas prices.

The Zacks Consensus Estimate for operating revenues from crude oil and condensate stands at $41.8 million, down from the year-ago quarter’s $43 million and the prior quarter’s $68 million. Analysts polled by Zacks project operating revenues from natural gas production at $412 million, 4.8% down year over year. However, the figure is 16.4% above the previous quarter’s result.

Additionally, the company’s Marcellus program is ramping up with exceptional results. The company has around 200,000 net acres in the prime Marcellus acreage with an estimated 3,000 remaining undrilled locations. This high-quality asset base in the prolific region can benefit it in its first quarter operations.

What Does Our Model Unveil?

Our proven model does not conclusively show that Cabot Oil & Gas is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Cabot Oil & Gas has an ESP of -6.23% as the Most Accurate estimate of 25 cents is lower than the Zacks Consensus Estimate of 27 cents. The figure represents the percentage difference between the two above-mentioned estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cabot Oil & Gas carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP leaves surprise prediction inconclusive as only a positive ESP increases the confidence about an earnings surprise.

We caution against Sell-rated stocks (#4 and 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Energy Stocks With Favorable Combination

Here are some companies from the energy space, which per our model, have the right combination of elements to beat on earnings this time around.

Frisco, TX-based Comstock Resources, Inc. (CRK - Free Report) has a Zacks Rank #2 and an Earnings ESP of +37.34%. The company will report financial numbers on May 14.

Houston, TX-based Apache Corporation (APA - Free Report) has a Zacks Rank of 3 and an Earnings ESP of +2.38%. The company will report earnings numbers on May 2.

Headquartered at The Woodlands, TX, Anadarko Petroleum Corporation is a Zacks #3 Ranked player and has an Earnings ESP of +12.96%. The company will announce earnings results on May 1.

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