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Hess (HES) Down 7.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Hess (HES - Free Report) . Shares have lost about 7.3% in that time frame, underperforming the S&P 500.

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

Hess Beats Q1 Earnings Estimates on Bakken Production Volumes

Hess Corporation reported adjusted first-quarter 2019 earnings per share of 9 cents against the Zacks Consensus Estimate of a loss of 26 cents and the year-ago quarter adjusted loss of 27 cents.

Revenues increased to $1,599 million from $1,390 million in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $1,475 million.

The strong first-quarter results were attributed to higher hydrocarbon production, backed by prolific plays like Bakken and Gulf of Mexico.

Q1 Operational Update

Exploration and Production

In the quarter under review, the Exploration and Production business reported a profit of $109 million, improving from a loss of $25 million a year ago.

Quarterly hydrocarbon production was 299 thousand barrels of oil equivalent per day, up 17.3% year over year on contributions from the onshore Bakken play and offshore resources in Gulf of Mexico.

Crude oil production increased from 134 thousand barrels per day in first-quarter 2018 to 164 thousand barrels per day in first-quarter 2019.

Natural gas liquids production totaled 40 thousand barrels compared, up from 37 thousand barrels in the prior-year quarter. Natural gas output was 572 thousand cubic feet (Mcf), up from 504 Mcf in the year-ago quarter.

Worldwide crude oil realization per barrel of $55.91 (including the impact of hedging) declined 6% year over year. The average worldwide natural gas liquids selling price also fell to $18.46 per barrel from $21.11 in the year-ago quarter. However, worldwide natural gas prices rose 15% to $4.43 per Mcf.

Midstream

From the midstream business, the company generated earnings of $37 million, up from $28 million a year ago.

Operating Expenses

Operating expenses in the first quarter totaled $266 million, down roughly 8% from the year-ago quarter’s $288 million.

Financials

Quarterly net cash flow from operations was $238 million at the end of the first quarter. Hess’ capital expenditures for exploration and production activities totaled $542 million, up 41.1% from $384 million in the prior-year quarter.

As of Mar 31, 2019, the company had $2,300 million in cash & cash equivalents and $6,550 million in long-term debt. The debt-to-capitalization ratio at the end of the quarter was 39.4%. 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 101.34% due to these changes.

VGM Scores

Currently, Hess has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hess has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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