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Why Is ConocoPhillips (COP) Up 2.2% Since Its Last Earnings Report?

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A month has gone by since the last earnings report for ConocoPhillips (COP - Free Report) . Shares have added about 2.2% in that time frame.

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

First-Quarter 2018 Results

ConocoPhillips reported first-quarter 2018 adjusted earnings of 96 cents per share, beating the Zacks Consensus Estimate of 74 cents. In the prior-year quarter, the company had posted a loss of 14 cents.

Revenues of $8,961 million steered past the Zacks Consensus Estimate of $8,680 million and improved from $7,771 million in the year-ago quarter.

The strong first-quarter results were supported by higher oil and natural gas price realizations.

The company has a strong discipline of returning cash back to shareholders. Through the first quarter, as high as 30% of the company’s operating cashflow has been returned through dividend payments and shares repurchases.

Exploration and Production

Production from continuing operations averaged 1,269 thousand barrels of oil equivalent per day (MBOED) in the quarter, lower than 1,593 MBOED in the year-ago quarter. The decline was led by divestment of assets and decline of field.

Price Realization

Average realized price for oil was $65.49 a barrel, up from $50.97 in the year-earlier quarter. Natural gas liquids were sold at $28.37 a barrel, up from $24.87 in the year-ago quarter. The price of natural gas was $5.13 per thousand cubic feet, up from $3.84 in first-quarter 2017.

Financials

As of Mar 31, 2018, the company had total cash and cash equivalents of $5.2 billion and debt of $17.1 billion, with a debt-to-capitalization ratio of 36%. In the reported quarter, ConocoPhillips generated $2.4 billion in cash from operating activities. Capital expenditures and investments totaled $1.5 billion and dividends payments grossed $338 million.

Total Expenses

Expenses of $7.2 billion in the first quarter contracted from $8 billion in the January-to-March quarter of 2017.

Guidance

ConocoPhillips reiterated its 2018 capital spending at $5.5 billion. For the April-to-June quarter of this year, the company projects production in the range of 1,170-1,210 MBOED.

For 2018, the company’s production projection was raised from 1,195 -1,235 MBOED to 1,200-1,240 MBOED.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 7.98 % due to these changes.

ConocoPhillips Price and Consensus

 

ConocoPhillips Price and Consensus | ConocoPhillips Quote

VGM Scores

At this time, COP has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Based on our scores, the stock is equally suitable for growth and momentum investors.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Notably, COP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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