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EOG Resources (EOG) to Report Q4 Earnings: A Beat in Store?

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EOG Resources, Inc. (EOG - Free Report) is expected to beat earnings estimates when it reports fourth-quarter 2020 results on Feb 25, after the closing bell.

In the last reported quarter, the company reported adjusted earnings per share of 43 cents, beating the Zacks Consensus Estimate of 16 cents due to a decline in lease and well expenses, partially offset by lower oil equivalent production volumes and prices. EOG Resources beat estimates twice in the last four quarters and missed on the other two occasions, delivering an average earnings surprise of 24.1%, as shown in the chart below.

EOG Resources, Inc. Price and EPS Surprise

EOG Resources, Inc. Price and EPS Surprise

EOG Resources, Inc. price-eps-surprise | EOG Resources, Inc. Quote

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

Trend in Estimate Revision

The Zacks Consensus Estimate for the company’s fourth-quarter earnings per share of 38 cents has witnessed six upward revisions and no downward movement in the past 30 days. This estimate is indicative of a 71.9% decrease from the year-ago reported figure.

The Zacks Consensus Estimate for its fourth-quarter revenues is pegged at $2.9 billion, suggesting a decrease of 32.9% from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for EOG Resources this time around. 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.

Earnings ESP: It has an Earnings ESP of +16.40%. This is because the Most Accurate Estimate for the quarter’s earnings is 44 cents per share, while the Zacks Consensus Estimate for the same is 38 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: EOG Resources currently carries a Zacks Rank #2.

Factors Likely to Influence Q4 Results

The West Texas Intermediate (WTI - Free Report) crude price — the American benchmark — declined sharply year over year owing to the coronavirus pandemic. For the month of October, November, and December 2020, average WTI crude price was recorded at $39.40, $40.94 and $47.02 per barrel, respectively, per data from the U.S. Energy Information Administration. The figures are considerably lower than the respective year-ago figures of $53.96, $57.03 and $59.88. Hence, the decline in crude prices will likely result in decreased profits from the year-ago level, as stated earlier. However, it is to be noted that the WTI crude oil price increased nearly 26% through the December quarter of 2020. This may have positioned the company for an earnings beat for the fourth quarter.

The Zacks Consensus Estimate for fourth-quarter average natural gas liquids (NGLs) price is pegged at $16.59 per barrel, signaling an increase from the year-ago figure of $16.23. Also, the consensus estimate for average natural gas price is $2.43 per thousand cubic feet, indicating an increase from $2.36 in the year-ago quarter. The rise in price levels of NGLs and natural gas might have offset the negative effects of lower crude price and boosted its bottom line in the fourth quarter.

Other Stocks That Warrant a Look

Here are some other firms that you may want to consider as these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Cactus, Inc. (WHD - Free Report) has an Earnings ESP of +32.35% and a Zacks Rank of #2, currently. The company is scheduled to release quarterly earnings on Feb 24. You can see the complete list of today’s Zacks #1 Rank stocks here.

Southwestern Energy Company (SWN - Free Report) has an Earnings ESP of +12.86% and is a Zacks #3 Ranked player. The company is scheduled to release fourth-quarter results on Feb 25. 

W&T Offshore, Inc. (WTI - Free Report) has an Earnings ESP of +1.07% and a Zacks Rank of 3. It is scheduled to report fourth-quarter results on Mar 3.

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