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Viper Energy (VNOM) to Report Q4 Earnings: What's in Store?

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Viper Energy Partners LP (VNOM - Free Report) is scheduled to report fourth-quarter 2020 results on Feb 22, after the closing bell.

In the last reported quarter, the partnership reported breakeven adjusted earnings per unit against the Zacks Consensus Estimate of a loss of 9 cents, thanks to a rise in oil equivalent production volumes and lower per unit operating costs.

Viper Energy beat bottom-line estimates thrice and missed once in the last four quarters, with the average surprise being 137.9%, as shown in the chart below.

Viper Energy Partners LP Price and EPS Surprise

 

Viper Energy Partners LP Price and EPS Surprise

Viper Energy Partners LP price-eps-surprise | Viper Energy Partners LP Quote

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter loss of 3 cents per share has seen two upward movements and one downward revision in the past 60 days. The figure suggests a year-over-year decline of 200%.

Further, the Zacks Consensus Estimate for revenues is pegged at $56.5 million for the quarter, indicating a decline of 39.1% from the year-ago reported figure.

Factors to Consider

The price of West Texas Intermediate (WTI) crude oil has improved roughly 25% through the December quarter of 2020. The approval of two coronavirus vaccines in the last month of the fourth quarter by U.S. health regulators boosted investor confidence in fuel demand recovery, lifting crude price.

However, the pricing scenario was definitely not as healthy as the pre-pandemic fourth-quarter 2019 levels. In the quarter, price of WTI crude traded consistently above the $50-per-barrel mark. In comparison, through the fourth quarter of 2020, the commodity traded below the mark.

The year-over-year decline in oil price is likely to have hurt the partnership’s bottom line as it has mineral interests in prolific oil-rich shale plays like the Eagle Ford and Permian Basin. Notably, the Zacks Consensus Estimate for the partnership’s oil production for the December quarter is pegged at 1,475 thousand barrels (MBbls), suggesting a decline from 1,516 MBbls a year ago.

Earnings Whispers

Our proven model does not indicate an earnings beat for Viper Energy. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The partnership’s Earnings ESP is -537.93%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The partnership currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Though an earnings beat looks uncertain for Viper Energy, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Diamondback Energy, Inc. (FANG - Free Report) has an Earnings ESP of +8.58% and a Zacks Rank #2. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +16.40% and is a Zacks #2 Ranked player. The company is scheduled to release fourth-quarter results on Feb 25.

Matador Resources Company (MTDR - Free Report) has an Earnings ESP of +19.90% and a Zacks Rank of 1. It is scheduled to report fourth-quarter results on Feb 23.

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