Back to top

Image: Bigstock

Why Northern Oil and Gas' (NOG) Q4 Earnings Are Likely to Beat

Read MoreHide Full Article

Northern Oil and Gas, Inc. (NOG - Free Report) is set to release fourth-quarter 2020 results before the opening bell on Friday, Mar 12. The current Zacks Consensus Estimate for the to-be-reported quarter is 67 cents per share on revenues of $119 million.

Let’s delve into the factors that might have influenced the Williston Basin-focused independent energy company’s performance in the December quarter. But it’s worth taking a look at Northern Oil and Gas’ previous-quarter performance first.

Highlights of Q3 Earnings & Surprise History

In the last-reported quarter, the Minnetonka, MN-based upstream firm, which doesn't operate any of its wells, beat the consensus mark due to higher-than-expected production and a tight leash on costs. Northern Oil and Gas had reported adjusted net income per share of 51 cents that went past the Zacks Consensus Estimate of 39 cents. However, the company’s quarterly revenues of $73.7 million had missed the Zacks Consensus Estimate of $87 million as a result of lower commodity prices.

As far as earnings surprises are concerned, Northern Oil and Gas beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, delivering a negative earnings surprise of 3.77%, on average. This is depicted in the graph below:

Northern Oil and Gas, Inc. Price and EPS Surprise

Northern Oil and Gas, Inc. Price and EPS Surprise

Northern Oil and Gas, Inc. price-eps-surprise | Northern Oil and Gas, Inc. Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the fourth-quarter bottom line remained the same in the last seven days. However, the estimated figure indicates a 34% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 25.93% decrease from the year-ago period.

Factors to Consider This Quarter

In the previous quarter, Northern Oil and Gas reported average daily U.S. output came in at 29,051 barrels of oil-equivalent per day (BOE), beating the Zacks Consensus Estimate of 28,533 BOE. The outperformance most likely continued in the fourth quarter of 2020 because of higher net completions and a number of Northern Oil and Gas’ operating partners bringing the previously shut-in production back online. As proof of its robust production profile, the Zacks Consensus Estimate for the company’s average daily production for the fourth quarter is pegged at 35,566BOE, up more than 22% sequentially. Northern Oil and Gas should also benefit from volume contribution from its recently concluded Permian Basin transactions.

Management’s ongoing cost-containment effort is also likely to have boosted its profit levels in the fourth quarter. Driven by operational efficiencies, Northern Oil and Gas was able to reduce its third-quarter 2020 well costs across the Williston acreage by 9.1%, a trend that most likely continued in the fourth quarter as well due to higher recoveries.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Northern Oil and Gas 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.

Northern Oil and Gas has an Earnings ESP of +5.22% and a Zacks Rank #3.

Other Stocks to Consider

Northern Oil and Gas is not the only company looking up this earnings cycle. Here are some other firms that you may want to consider on the basis of our model:

FedEx Corporation (FDX - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank #2. The firm is scheduled to release earnings on Mar 18.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ulta Beauty, Inc. (ULTA - Free Report) has an Earnings ESP of +6.24% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Mar 11.

Ollie’s Bargain Outlet Holdings, Inc. (OLLI - Free Report) has an Earnings ESP of +3.73% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Mar18.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>