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Domestic energy explorer Comstock Resources Inc. (CRK - Analyst Report) is set to release its fourth-quarter 2012 results after the closing bell on Monday, Feb 11.

In the preceding quarter, Comstock delivered a negative 92.31% earnings surprise – the third earnings miss in a row – hamstrung by depressed natural gas prices. Let’s see how things are shaping up prior to this announcement.

Factors to Consider This Quarter

Comstock’s highly gas-weighted reserves/production profile, along with its geographically concentrated asset base, is the key area of concern. Additionally, the rise in net debt/reduction of liquidity associated with the recent Delaware Basin acquisition is a drag on the balance sheet.

Taking a cautious view of gas prices, the company’s capital program specifically focuses on the promising North American liquids-rich areas, which is a major shift away from dry natural gas development. However, with natural gas prices likely to remain weak over the next one year or so, thereby pressuring profitability, Comstock’s ability to generate positive earnings surprise will be limited.

In fact, the Zacks Consensus Estimate for the fourth quarter has moved down by 6 cents to a loss of 30 cents per unit over the last 30 days as the tendency for a downward estimate revision was more obvious.

Earnings Whispers

Our proven model does not conclusively show that Comstock Resources is likely to beat the Zacks Consensus Estimate in the fourth quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong Buy) or at least Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold) for this to happen. Unfortunately this is not the case here as elaborated below.

Negative Zacks ESP: This is because the Most Accurate estimate stands at a loss of 34 cents, while the Zacks Consensus is narrower at a loss of 30 cents. This results in a difference of -13.33%.

Zacks Rank #3 (Hold): Comstock Resources’ Zacks Rank #3 (Hold), however, increases the predictive power of ESP. That said, we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks to Consider

Here are some energy firms you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Northern Tier Energy L.P. (NTI - Snapshot Report), earnings ESP of +2.94% and Zacks Rank #1 (Strong Buy).

Hercules Offshore Inc. (HERO - Snapshot Report), earnings ESP of +14.29% and Zacks Rank #2 (Buy).

HollyFrontier Corp. (HFC - Snapshot Report), earnings ESP of +3.52% and Zacks Rank #2 (Buy).

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