Ovintiv Inc. (OVV - Free Report) is set to release first-quarter 2021 results after the closing bell on Wednesday, Apr 28. The current Zacks Consensus Estimate for the to-be-reported quarter is 97 cents per share on revenues of $1.61 billion.
Let’s delve into the factors that might have influenced the independent energy producer’s performance in the March quarter. But it’s worth taking a look at Ovintiv’s previous-quarter performance first.
Highlights of Q4 Earnings & Surprise History
In the last-reported quarter, the Denver, CO-based upstream player beat the consensus mark due to successful cost-control initiatives. Ovintiv had reported adjusted earnings per share of 70 cents that went past the Zacks Consensus Estimate of 63 cents. However, the company’s quarterly revenues of $1.5 billion underperformed the Zacks Consensus Estimate by 9.7%, dragged down by lower production and oil price realizations.
As far as earnings surprises are concerned, Ovintiv beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, delivering an earnings surprise of 10.76%, on average. This is depicted in the graph below:
Factors to Consider This Quarter
According to the U.S. Energy Information Administration, in January, February and March of 2020, the average monthly WTI crude price was $57.52, $50.54 and $29.21 per barrel, respectively. In 2021, average prices were $52 in January, $59.04 in February and $62.33 in March, i.e., mostly stronger year over year.
The news is even better on the natural gas front. In Q1 of 2020, U.S. Henry Hub average natural gas prices were $2.02 per MMBtu in January and fell to $1.91 in February before tumbling further to $1.79 in March. Coming to 2021, the fuel was trading at $2.71, $5.35 and $2.62 per MMBtu, in January, February and March, respectively. In other words, natural gas traded higher in all the three months.
This price boost is likely to have buoyed the first-quarter results of oil and gas producer like Ovintiv.
On top of this, it will also benefit from the cost-cutting efforts. Ovintiv has done a commendable job of cutting its expenses and is targeting $1.8 billion of cumulative cash cost savings during the 2021-2024 period compared to 2020. As it is, Ovintiv’s innovation and sophisticated drilling technology has resulted in a significant improvement in well costs, with the company expecting this year’s costs to be at least 20% lower than the 2019 averages. This is expected to have provided a further boost to the company’s first-quarter earnings and cash flows.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Ovintiv this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ovintiv has an Earnings ESP of +7.44% and a Zacks Rank #1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Ovintiv is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Chevron Corporation (CVX - Free Report) has an Earnings ESP of +6.08% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Apr 30.
Helix Energy Solutions Group, Inc. (HLX - Free Report) has an Earnings ESP of +25% and a Zacks Rank #2. The firm is scheduled to release earnings on Apr 26.
BP plc (BP - Free Report) has an Earnings ESP of +5.10% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Apr 27.
Zacks Top 10 Stocks for 2021
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Ovintiv Inc. (OVV - Free Report) is set to release first-quarter 2021 results after the closing bell on Wednesday, Apr 28. The current Zacks Consensus Estimate for the to-be-reported quarter is 97 cents per share on revenues of $1.61 billion.
Let’s delve into the factors that might have influenced the independent energy producer’s performance in the March quarter. But it’s worth taking a look at Ovintiv’s previous-quarter performance first.
Highlights of Q4 Earnings & Surprise History
In the last-reported quarter, the Denver, CO-based upstream player beat the consensus mark due to successful cost-control initiatives. Ovintiv had reported adjusted earnings per share of 70 cents that went past the Zacks Consensus Estimate of 63 cents. However, the company’s quarterly revenues of $1.5 billion underperformed the Zacks Consensus Estimate by 9.7%, dragged down by lower production and oil price realizations.
As far as earnings surprises are concerned, Ovintiv beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, delivering an earnings surprise of 10.76%, on average. This is depicted in the graph below:
Factors to Consider This Quarter
According to the U.S. Energy Information Administration, in January, February and March of 2020, the average monthly WTI crude price was $57.52, $50.54 and $29.21 per barrel, respectively. In 2021, average prices were $52 in January, $59.04 in February and $62.33 in March, i.e., mostly stronger year over year.
The news is even better on the natural gas front. In Q1 of 2020, U.S. Henry Hub average natural gas prices were $2.02 per MMBtu in January and fell to $1.91 in February before tumbling further to $1.79 in March. Coming to 2021, the fuel was trading at $2.71, $5.35 and $2.62 per MMBtu, in January, February and March, respectively. In other words, natural gas traded higher in all the three months.
This price boost is likely to have buoyed the first-quarter results of oil and gas producer like Ovintiv.
On top of this, it will also benefit from the cost-cutting efforts. Ovintiv has done a commendable job of cutting its expenses and is targeting $1.8 billion of cumulative cash cost savings during the 2021-2024 period compared to 2020. As it is, Ovintiv’s innovation and sophisticated drilling technology has resulted in a significant improvement in well costs, with the company expecting this year’s costs to be at least 20% lower than the 2019 averages. This is expected to have provided a further boost to the company’s first-quarter earnings and cash flows.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Ovintiv this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ovintiv has an Earnings ESP of +7.44% and a Zacks Rank #1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Ovintiv is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Chevron Corporation (CVX - Free Report) has an Earnings ESP of +6.08% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Apr 30.
Helix Energy Solutions Group, Inc. (HLX - Free Report) has an Earnings ESP of +25% and a Zacks Rank #2. The firm is scheduled to release earnings on Apr 26.
BP plc (BP - Free Report) has an Earnings ESP of +5.10% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Apr 27.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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