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Zacks #1 Stocks on the Move 04/29/2016

Company Name Symbol %Change
GREAT PANTHE GPL
9.65%
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6.00%
TURQUOISE HI TRQ
5.30%
NEW GOLD INC NGD
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4.88%

Analyst Blog

CNA Financial (CNA) Q1 Earnings May Beat: Stock to Gain?

Posted Fri Apr 29, 04:37 pm ET

by Zacks Equity Research

We expect multiline insurer CNA Financial Corporation CNA to beat expectations when it reports first-quarter results on Apr 28 before market opens.

Why a Likely Positive Surprise?

Our proven model shows that CNA Financial has the right combination of two key ingredients to beat on earnings.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +13.33%. This is because the Most Accurate estimate of 68 cents is pegged higher than the Zacks Consensus Estimate of 60 cents. A positive ESP is a meaningful indicator of a likely positive earnings surprise for the company.

Zacks Rank: CNA Financial carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank of #1, 2 or 3 have a significantly higher chance of beating on earnings.

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

What's Driving the Better-Than-Expected Earnings?

The commercial segment is likely to have delivered an improved performance with a better underlying loss ratio. Underwriting actions taken should improve retentions.

Overall premiums are expected to have improved. Prudent management of the long-term care book of business is likely to pay off.

However, a still soft interest rate environment may weigh on the company’s performance. Also accounting changes made will likely result in lower investment income.

With respect to the surprise trend, CNA Financial surpassed expectations in two of the last four quarters. Nonetheless, the company delivered an average negative surprise of 35.55%.

CNA Financial’s share price has been fluctuating over the last few days. We wait to see how the stock reacts to the company’s first-quarter performance.

Other Stocks to Consider

Here are some other companies you may want to consider as these also have the right combination of elements to post an earnings beat this quarter:

American Financial Group Inc. AFG with an Earnings ESP of +0.60% and a Zacks Rank #2 (Buy). The company will release fourth-quarter earnings results on May 2.

Prudential Financial, Inc. PRU with an Earnings ESP of +0.42% and a Zacks Rank #3. The company will release fourth-quarter earnings results on May 4.

Cigna Corp. CI with an Earnings ESP of +0.46% and a Zacks Rank #3. The company will release fourth-quarter earnings results on May 6.
 

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What's in Store for Black Diamond (BDE) in Q1 Earnings?

Posted Fri Apr 29, 04:27 pm ET

by Zacks Equity Research

Black Diamond, Inc. BDE is set to report first-quarter 2016 results on May 2, after the market closes. Last quarter, the company posted a positive earnings surprise of 150.00%. However, Black Diamond has surpassed earnings estimates thrice in the trailing four quarters, with a significant average positive surprise of 91.44%.

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

Factors at Play

Black Diamond is a sporting goods company which has been witnessing a consistent growth in sales over the past few quarters, backed by higher sales of its apparel brand and the continued rollout of POC's cycling products, including the new spring 2015 "Race Day" line and expanded assortment of eyewear.

During the fourth quarter the company implemented a few strategies like streamlining of manufacturing processes and overhead cost reduction. This should improve margins in the to-be-reported quarter.

However, a tough retail environment, combined with warmer-than-expected weather conditions on the East Coast (that affected categories like gloves) are likely to keep revenues under pressure.

Earnings Whispers

Our proven model does not conclusively show that Black Diamond is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Negative Zacks ESP: Black Diamond’s Earnings ESP is -150.00%. This is because the Most Accurate estimate is pegged at a loss of 10 cents while the Zacks Consensus Estimate stands at a loss of 4 cents.

Zacks Rank: Black Diamond has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks That Warrant a Look

Here are some stocks in the broader consumer discretionary sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Boyd Gaming Corp. BYD with an Earnings ESP of +3.33% and a Zacks Rank #3.

CBS Corp. CBS, with an Earnings ESP of +1.08% and a Zacks Rank #3.

Central Garden & Pet Co. CENT, with has an Earnings ESP of +3.39% and a Zacks Rank #2.

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What Awaits Utility Stock Eversource (ES) in Q1 Earnings?

Posted Fri Apr 29, 04:24 pm ET

by Zacks Equity Research

Diversified energy company, Eversource Energy ES is scheduled to report first-quarter 2016 results on May 5, before the market opens. Last quarter, the company reported a negative earnings surprise of 7.69%. Let’s see how things are shaping up for this quarter.

Factors to Consider

Eversource’s natural gas segment is a key growth driver at the company. The company has shifted around 1,000 customers to natural gas in January and expects customer growth to continue, going ahead. In fact, Eversource expects to add nearly 12,500 to its natural gas customer base in 2016.

On the flip side, the company’s service territories experienced historically warm temperatures last December. The warmer-than-expected winter lowered household expenditure on heating. This can not only offset the gain derived from customer growth, but may continue to dampen revenues in the to-be-reported quarter.

Nevertheless, Eversource remains focused on upgrading its distribution and utility transmission infrastructure, which will not only enable the company to provide reliable services to its customers but also aid in achieving its earnings growth target of 5–7% in 2016 and beyond. The company projects transmission capital expenditure of $911 million in 2016.

Surprise History

The above chart indicates that Eversource Energy was able to beat earnings estimate in two of the last four quarters. The average positive earnings surprise was 2.86%.

Earnings Whispers

Our proven model does not conclusively show that Eversource Energy will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. But that is not the case here, as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -3.75%. This is because the Most Accurate Estimate stands at 77 cents, while the Zacks Consensus Estimate is pegged higher at 80 cents.

Zacks Rank: Though Eversource Energy’s Zacks Rank #3 increases the predictive power of ESP, the company’s negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Ranks #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few operators in Utility-Electric Power space worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:

Consolidated Edison, Inc. ED has an Earnings ESP of + 0.82% and a Zacks Rank #3. The company is expected to report earnings on May 5.

Hawaiian Electric Industries Inc. HE has an Earnings ESP of + 2.70% and a Zacks Rank #3. The company is expected to report earnings on May 4.

Pattern Energy Group Inc. PEGI has an Earnings ESP of + 466.67% and a Zacks Rank #3. The company is expected to report earnings on May 5.

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What's in Store for Noble Energy (NBL) in Q1 Earnings?

Posted Fri Apr 29, 04:20 pm ET

by Zacks Equity Research

Noble Energy Inc. NBL will release first-quarter 2016 financial results before the market opens on May 4, 2016. In the prior quarter, this independent energy company reported a positive surprise of 1,200.0%. Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider

Depressed commodity prices are a serious concern for the players in the oil & natural gas space. To cope with low prices, Noble Energy is aggressively cutting down capital expenditures and focusing only on areas that hold long-term prospects.

Noble Energy expects the workover in its Isabela assets to impact results in the first quarter of 2016. Despite lowering its capital expenditure by nearly 50% from 2015 levels, Noble Energy expects total production in 2016 to go up by 10%.

Surprise History

The above chart indicates that Noble Energy was able to deliver positive earnings surprises in two of the last four quarters. The average positive surprise was 373.33%.

Earnings Whispers

Our proven model does not conclusively show that Noble Energy is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here.

Zacks ESP: This is because the Most Accurate estimate is a loss of 56 cents and the Zacks Consensus Estimate is pegged at  a loss of 53 cents, resulting in -5.66% ESP.

Zacks Rank: Though Noble Energy’s Zacks Rank #3 increases the predictive power of the ESP, its -5.66% ESP makes a beat unlikely this quarter.

We caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Stocks in the U.S. oil and natural gas exploration and production space worth considering on the basis of our model are as follows:

Rice Energy Inc. RICE has an earnings ESP of +11.11% and a Zacks Rank #2. It is expected to report earnings on May 4, 2016.

Murphy Oil Corp. MUR has an earnings ESP of +24.14% and a Zacks Rank #3. It is expected to report earnings after the market closes on May 4, 2016.

Chesapeake Energy Corp. CHK has an earnings ESP of +9.09% and a Zacks Rank #3. It is expected to report earnings before the market opens on May 5, 2016.

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Can Chipotle's (CMG) Launch of Chorizo Boost Sales?

Posted Fri Apr 29, 04:15 pm ET

by Zacks Equity Research

Reportedly, Chipotle Mexican Grill, Inc. CMG is going to leave no stone unturned to lure back customers to its restaurants.

The company has recently turned to menu upgradation to bring back customers. Previously, the company had given away free burritos to customers as a promotional offer.

This time, Chipotle is introducing “chorizo” – a mix of spicy pork and chicken, which proved to be popular among guests when it was tested last year.

The company’s first-quarter 2016 revenues were marred by negative publicity surrounding the E. coli outbreak and norovirus outbreak in many states, which began towards the end of 2015. Traffic was severely hurt when the news broke out about the outbreak in Oregon and Washington. It later spread to seven other states – Illinois, Maryland, Pennsylvania, California, Minnesota, New York and Ohio. Along with this, a norovirus outbreak related to one of its outlets in Boston's Cleveland Circle added to the company’s woes.

Later, in December, the U.S. Centers for Disease Control and Prevention (CDC) announced that it was probing the restaurateur’s links with another E. coli outbreak (with a rare DNA fingerprint) in three other states – Kansas, North Dakota and Oklahoma.

Naturally, as a safety measure, the fast casual chain was forced to close several outlets. Although these were reopened later with fresh ingredients, and after deep cleaning and sanitizing, the incidents dealt a severe blow to Chipotle’s sales.

The fact that Chipotle uses only healthy ingredients has long been its marketing strength and attracted customers despite its comparatively high prices. However, with the negative publicity associated with the E. coli outbreak, Chipotle is now likely to fall out of favor with health-conscious diners.

Chipotle has also reportedly enforced stricter guidelines for suppliers in the wake of these outbreaks, although management is unsure whether all its local suppliers will be able to keep up with them. As a result, changing suppliers would not only raise costs, but will also be a major shift from the company’s marketing policy of using only locally produced ingredients.

In our view, it will take some time for the fast casual restaurant operator to turn the business around completely. However, the introduction of a popular menu item might perk up sales at the moment.

Currently, Chipotle carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same industry include Darden Restaurants, Inc. DRI, Dave & Buster's Entertainment, Inc. PLAY and Carrols Restaurant Group, Inc. TAST. All these stocks sport a Zacks Rank #1 (Strong Buy).

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Sturm, Ruger (RGR) Q1 Earnings: Stock to Pull a Surprise?

Posted Fri Apr 29, 04:13 pm ET

by Zacks Equity Research

Sturm, Ruger & Company RGR is scheduled to release first-quarter 2016 financial results on May 2.

Last quarter, the company delivered a positive earnings surprise of 17.33%. The four-quarter trailing average surprise is a positive 10.20%. Let's see how things are shaping up for this announcement.



Factors at Play

Sturm, Ruger has been witnessing strong demand for firearms, especially those used for self-defense such as centerfire pistols. This increase in demand is driving sell-through across the channels and has aided to reduce the company's inventory levels. During its fourth-quarter earnings call, the company said that it expects strong demand for both self-defense firearms and new products in the beginning of 2016.

According to the FBI's National Instant Criminal Background Check System ("NICS"), in the first quarter of 2016 ending Mar 31, 2016, permit applications saw growth of 36.1% year over year and 2% sequentially. Though it is not possible to draw a one-to-one co-relation between the NICS report and the number of firearms sold, any upward or downward movement of firearm background checks has been seen to have a similar impact on firearm sales.

The company continues to invest in new product development, in addition to boosting the capacity of certain established products which already enjoy robust demand. These initiatives will likely drive top-line growth at Sturm, Ruger.

Meanwhile, Sturm, Ruger faces stiff competition from other firearm companies like Smith & Wesson Holding Corp. SWHC, and Vista Outdoor VSTO. Its competitors may have more extensive or specialized products, which could hurt the Sturm, Ruger 's financial performance.

Earnings Whispers

Our proven model does not conclusively show that Sturm, Ruger & Company is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The company has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 96 cents.

Zacks Rank: Sturm, Ruger carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Peer Release

Louisiana-based Pool Corp.'s POOL first-quarter of 38 cents per share surpassed the Zacks Consensus Estimate of 25 cents by a wide 52%. Reported earnings, however,surged 100% from the prior-year quarter figure of 19 cents.

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Potbelly (PBPB) Q1 Earnings: Will Solid Comps Drive Stock?

Posted Fri Apr 29, 04:08 pm ET

by Zacks Equity Research

Potbelly Corporation PBPB is set to report first-quarter 2016 results on May 3, after the market closes.

Last quarter, the company posted a positive earnings surprise of 33.33%. Moreover, the Chicago-based casual-dining restaurant chain has surpassed estimates in two of the trailing four quarters, with an average positive surprise of 15.78%.

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

Factors to Consider

Potbelly has been reporting positive comps over the past few quarters and we expect the trend to continue in the to-be-reported quarter as well. Positive traffic trends — mainly on the back of extensive menu innovation and aggressive marketing initiatives — are expected to drive comps.

Further, the company is focused on unit growth in the U.S. to cash in on increasing consumer demand for fast-casual restaurants, which should continue to add to the top line in the first quarter. Additionally, the company’s catering, delivery and pickup services should aid sales. The company is also boosting its digital, social and mobile presence to resonate better with guests, and these efforts are expected to support traffic growth.

Nevertheless, we are concerned about rising costs. Increased labor expenses, due to minimum wage increases across some of the markets in which Potbelly operates, would pose as headwinds. As a result, the company’s rising cost structure is likely to hurt margins in the first quarter.

Earnings Whispers

Our proven model does not conclusively show that Potbelly is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for Potbelly is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 4 cents.

Zacks Rank: Potbelly has a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some restaurant stocks that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

The Wendy's Company WEN, with an Earnings ESP of +16.67% and a Zacks Rank #1.

Bojangles', Inc. BOJA, with an Earnings ESP of +5.88% and a Zacks Rank #3.

Red Robin Gourmet Burgers Inc. RRGB, with an Earnings ESP of +0.91% and a Zacks Rank #3.

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Scripps Networks (SNI) Q1 Earnings: Stock Set to Disappoint?

Posted Fri Apr 29, 04:06 pm ET

by Zacks Equity Research

Scripps Networks Interactive, Inc. SNI is scheduled to release first-quarter 2016 financial numbers before the opening bell on May 5.

In the fourth quarter of 2015, Scripps Networks had posted a positive earnings surprise of 33.66%. In fact, the company boasts an impressive history with respect to earnings, having outshined the Zacks Consensus Estimate in each of the last four quarters. The average earnings beat is 17.93%.

However, things don’t look rosy this time round and the stock may be in for a rude shock in the first quarter. In fact our quantitative model too does not hint at an earnings beat. Here’s why

Scripps Networks does not have the right combination of two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – necessary for increasing the odds of an earnings surprise.

Zacks ESP: The Earnings ESP for Scripps Networks is -5.94% with the Most Accurate estimate lagging the Zacks Consensus Estimate of $1.01 by 6 cents.

Zacks Rank: Scripps Networks carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, that alone is not sufficient to secure an earnings beat.

As a caution, we advise investors not to consider Sell-rated (Zacks Rank #4 or 5) stocks going into an earnings announcement.

Factors Likely at Play

We expect Scripps Networks’ first-quarter revenues to be hurt by foreign exchange related headwinds. Moreover, the company’s bottom line is likely to face the brunt of elevated programming expenses.

During the first quarter, the Knoxville, TN-based company completed the remaining 35% stake buy in Travel Channel Media from Cox Communications Inc. Moreover, Scripps Networks bought a 52.7% stake in Poland’s popular multi-platform media company, TVN, last year. Even though positive on the company’s growth-by acquisition strategy, we cannot ignore the integration risks attached to it. Moreover, this could exert further pressure on the company’s cash position.

However, we are impressed with the company’s efforts to reward shareholders through dividend payments/buybacks. During the quarter, the company raised its quarterly dividend per share by 8.7% to 25 cents. We expect a detailed commentary on these shareholder friendly activities during the conference call.

Stocks to Consider

With Scripps Networks likely to disappoint, we present below some other companies in the broader Consumer Discretionary sector you may want to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.

Discovery Communications, Inc. DISCA, with an earnings ESP of +2.22% and a Zacks Rank #3. The company is scheduled to report first-quarter 2016 earnings on May 5.

Time Warner Inc. TWX, with an earnings ESP of +1.55% and a Zacks Rank #2. The company is slated to report first-quarter 2016 results on May 4.

Twenty-First Century Fox, Inc. FOXA has an Earnings ESP of +2.17% and a Zacks Rank #3. The company is scheduled to report third-quarter fiscal 2016 results on May 4.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Frontier Communications (FTR): What's Up in Q1 Earnings?

Posted Fri Apr 29, 04:03 pm ET

by Zacks Equity Research

Frontier Communications Corporation FTR is slated to release first-quarter 2016 results on May 3, before the market opens.

In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by a huge 266.67%. However, the company has delivered positive earnings surprises in three of the four trailing quarters, with an average beat of 164.27%. Let’s see how things are shaping up for this announcement.

Factors Likely to Influence this Quarter

Frontier’s security solutions division, Frontier Secure, has been a solid source of growth for the company. The division witnessed 141% growth in operating income at the end of the fourth quarter of 2015 and its subscriptions made a significant contribution to the Average Revenue per Customer (ARPC) for the company. Moreover, it has partnered with DistiNow to distribute its security solutions, which we believe can generate further revenues for Frontier.

Recently, Frontier launched its latest line of services branded as ‘Vantage’ – a premium digital platform to deliver HD TV, ultra-fast broadband and enhanced Voice over Internet Protocol (VoIP) services. The services will be made available to customers as Vantage TV, Vantage Internet, and Vantage Voice, respectively. With the launch of the Vantage brand, Frontier will join the likes of AT&T Inc (T) and Comcast Corp. (CMCSA), which have witnessed success with their respective U-Verse and Xfinity brands. We believe that with the introduction of a premium brand, the company can maintain sustainable broadband subscriber growth.

Also, Frontier is leaving no stones unturned in deriving benefits from the growing Business Service Segment. In particular, Frontier has been targeting the Small and Medium Businesses (SMBs). It has been enhancing its Ethernet capabilities lately and eyeing the retention of SMB customers with attractive plans. However, the persistent decline in the residential voice segment is a major headwind.

Earnings Whispers

Our proven model does not conclusively show that Frontier Communications is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a 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:Frontier Communications has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and Zacks Consensus Estimate are pegged at a loss of 9 cents.

Zacks Rank:Frontier Communications has a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

A Stock to Consider

Here is a company you may consider, as our model shows it has the right combination of elements to post an earnings beat this quarter:

Yelp Inc. (YELP), with Earnings ESP of +18.75% and a Zacks Rank #3.

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Encana (ECA) to Report Q1 Earnings: What's in the Cards?

Posted Fri Apr 29, 04:01 pm ET

by Zacks Equity Research

Oil and gas explorer Encana Corporation ECA is set to report first-quarter 2016 results on Tuesday, May 3, before the market opens.  

Coming to its earnings surprise history, Encana reported an average positive earnings surprise of 30.16% for the last four quarters. Let’s see how things are shaping up for this announcement.  

Factors to Consider This Quarter

Calgary, Alberta-based Encana is a focused pure-play natural gas exploration and production (E&P) company.  It is one of the largest natural gas companies in North America with the potential for robust growth in production owing to its huge inventory of reserves and a strong resource base.

Encana has been working toward reducing expenses by selling high cost to low profit generating assets. The divestiture of several such assets as part of the company’s portfolio streamlining strategy should bode well.

The proceeds are being used to lower debt burden though much is yet to be achieved. This offers financial flexibility to the company to better handle the current volatile market condition. Also, Encana remains focused on expanding its asset base to generate higher returns. Initiatives like these should have a positive impact on the upcoming earnings.

However, the company’s financials are heavily exposed to commodity prices. During the January-March period crude traded below $40 per barrel. Most importantly, the West Texas Intermediate (WTI) crude fell to the 12-year low mark in mid February. On top of that, natural gas has not fared well as reflected by gas pricing fundamentals that were weaker than the prior-year quarter. This in turn is likely to result in lower revenues for the firm.

Encana is also facing tough competition from producers of renewable sources of energy. With customers increasingly opting for environmentally friendly renewable energy resources, the company’s profits are being affected by the stiff competition.

Other concerns for the firm include rising costs and a highly leveraged balance sheet.

Earnings Whispers

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

Zacks ESP: Encana's Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: Encana has a Zacks Rank #3, which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

The Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions. 

Stocks That Warrant a Look

Here are some companies from the energy sector with the right combination of elements to post an earnings beat this quarter:

Enable Midstream Partners, LP ENBL with an Earnings ESP of +21.05% and a Zacks Rank #2 (Buy).

Bill Barrett Corp. BBG with an Earnings ESP of + 9.09% and a Zacks Rank #2.  

Spectra Energy Partners LP SEP has an Earnings ESP of + 2.27% and a Zacks Rank #2.

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