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Why a Beat is Likely for Cabot (COG) This Earnings Season

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Cabot Oil & Gas Corporation (COG - Free Report) is set to release first-quarter 2021 results after the closing bell on Thursday, Apr 29. The current Zacks Consensus Estimate for the to-be-reported quarter is 33 cents per share on revenues of $477.66 million.

Let’s delve into the factors that might have influenced the independent natural gas producer’s performance in the March quarter. But it’s worth taking a look at Cabot’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based upstream player beat the consensus mark on strong production volumes and a tight leash on costs. Cabot had reported adjusted earnings per share of 26 cents that went past the Zacks Consensus Estimate of 20 cents. Moreover, the company’s quarterly revenues of $456.8 million outperformed the Zacks Consensus Estimate by 11.5%.

As far as earnings surprises are concerned, Cabot beat the Zacks Consensus Estimate in each of the last four quarters, delivering an earnings surprise of 33.23%, on average. This is depicted in the graph below:

Cabot Oil & Gas Corporation Price and EPS Surprise

Cabot Oil & Gas Corporation Price and EPS Surprise

Cabot Oil & Gas Corporation price-eps-surprise | Cabot Oil & Gas Corporation Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line remained the same in the last seven days. However, the estimated figure indicates a 135.71% surge year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 23.60% increase from the year-ago period.

Factors to Consider This Quarter

According to the U.S. Energy Information Administration, 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.

As a reflection of this price boost, the Zacks Consensus Estimate for the first-quarter average sales price for natural gas is pegged at $2.29 per thousand cubic feet, indicating an increase of 33.1% year over year. The year-over-year improvement in realizations has most likely impacted Cabot’s revenues and cash flows, as all of its production is in the form of natural gas. In fact, the Zacks Consensus Estimate for operating revenues from natural gas production for the to-be-reported quarter stands at $494 million, implying a 33.4% increase from $370.3 million in the January-March period of 2020.

Why a Likely Positive Surprise?

Our proven model predicts an earnings beat for Cabot 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.

Cabot has an Earnings ESP of +2.31% and a Zacks Rank #3.

Other Stocks to Consider

Cabot 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.

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

Ovintiv Inc. (OVV - Free Report) has an Earnings ESP of +9.20% and a Zacks Rank #1. The firm is scheduled to release earnings on Apr 28.

Magellan Midstream Partners, L.P. (MMP - Free Report) has an Earnings ESP of +5.51% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Apr 29.

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