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Is a Beat in Store for Newfield (NFX) This Earnings Season?

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Newfield Exploration Company is expected to report second-quarter 2018 earnings on Jul 31, after the closing bell.

The upstream energy player beat the Zacks Consensus Estimate in the last reported quarter, the positive earnings surprise being 15.5%. Moreover, the company has an average positive earnings surprise of 13.1% in the trailing four quarters.
 

Let’s see how things are shaping up for this announcement.

Which Way Are Estimates Treading?

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

The Zacks Consensus Estimate of 83 cents for second-quarter 2018 earnings has been revised upward over the last seven days, with three firms being bullish and one firm taking a bearish stance. It reflects an improvement of about 93% from the year-ago quarter’s figure.

Further, the Zacks Consensus Estimate for revenues is pegged at $613.9 million, indicating a rise of 52.7% from the prior-year quarter’s tally.

Earnings Whisper

Our proven model shows that Newfield is likely to beat estimates this quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Newfield’s Earnings ESP is +0.82%. This is because the Most Accurate Estimate is at 84 cents and the Zacks Consensus Estimate is pegged at 83 cents. A favorable ESP serves as a leading indicator of a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.      

Zacks Rank: Newfield has a Zacks Rank #3.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

Factors to Consider

The Zacks Consensus Estimate for average sale price of natural gas is pegged at $2.46 per thousand cubic feet (Mcf), reflecting a decline from $2.70 per Mcf in the last reported quarter and $2.75 per Mcf in the year-ago quarter. The Zacks Consensus Estimate for natural gas production is pegged at 37.41 billion cubic feet (Bcf), indicating an improvement from 36.1Bcf in first-quarter 2017 and 30Bcf in the year-ago quarter.

The average sales price of natural gas liquids is estimated at $29.49 per barrel, reflecting a rise from $28.04 per barrel and $24.54 per barrel in the last reported quarter and year-ago quarter, respectively. Production is expected to rise to 3.34 million barrels (MMBbls), indicating a rise from the year-ago quarter’s 2.49 MMBbls and from the last reported quarter’s 3.16 MMBbls.

Average crude oil and condensate sales price is expected at $60 a barrel, showing a rise from $58 per barrel in the first quarter and $43.42 per barrel in the prior-year quarter. Production of crude oil per day for the second quarter is expected at 7.24MMBbls, showing a rise from the previous quarter’s 6.71 MMBbls and the year-ago quarter’s 5.96 MMBbls.

We expect the company to deliver higher oil and liquids production figures in the upcoming quarterly results, which will also reflect the impact of price hike.

Q2 Price Performance

During the second quarter, Newfield’s shares outperformed the industry. The company’s shares gained 23.9% compared with the industry’s 12.4% rise.



 

Stocks to Consider

Here are a few companies, which per our model, have the right combination of elements to post an earnings beat in the quarter to be reported.

Canadian Natural Resources Limited (CNQ - Free Report) , based in Calgary, Alberta, is anindependent exploration and production (E&P) company. The company has an Earnings ESP of +1.42% and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Occidental Petroleum Corporation (OXY - Free Report) is an international oil and gas exploration and production company. The company has an Earnings ESP of +1.75% and carries a Zacks Rank #2.

Houston, TX-based EOG Resources, Inc (EOG - Free Report) is a major independent oil and gas exploration and production company. The company has an Earnings ESP of +2.02% and a Zacks Rank #3.

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