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Here's What to Expect From ConocoPhillips' (COP) Q1 Earnings

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ConocoPhillips (COP - Free Report) is scheduled to report first-quarter 2021 results on May 4, before the opening bell.

In the last reported quarter, the upstream energy company’s adjusted loss per share of 19 cents was narrower than the Zacks Consensus Estimate by a penny, primarily due to increased output in Canada. Moreover, overall bitumen production rose from the year-ago period. Additionally, production and operating expenses declined for the quarter. The positives were partially offset by lower realized commodity prices and total production volumes.

The firm beat earnings estimates twice in the trailing four quarters, while missed the same on the other two occasions, delivering an average surprise of 13.6%.

ConocoPhillips Price and EPS Surprise

ConocoPhillips Price and EPS Surprise

ConocoPhillips price-eps-surprise | ConocoPhillips Quote

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

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings per share of 57 cents has witnessed five upward and three downward revisions by firms in the past 30 days. This estimate is indicative of a 26.7% increase from the year-ago reported figure.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $8.3 billion, suggesting a jump of 73.4% from the year-ago reported figure.

Factors Driving First-Quarter Earnings

Being primarily involved in the exploration and production of oil and natural gas, ConocoPhillips’ earnings and revenues are directly related to commodity prices. It expects first-quarter overall production in the range of 1,470-1,490 thousand barrels of oil equivalent per day (MBoe/d), excluding Libya. The figure indicates an increase from its reported production of 1,289 MBoe/d in the year-ago quarter. Notably, the expected figure includes a 50 MBoe/d hit from cold Winter Storm Uri.

ConocoPhillips expects total crude oil production for the quarter to be 772 thousand barrels per day (MBbls/d), excluding Libya, indicating a jump from 654 MBbls/d a year ago. The company expects average realized price for crude oil in the band of $56-$58 per barrel for the first quarter, indicating a rise from $48.86 in the year-ago period. Also, average realized price for natural gas is expected within $4.30-$4.50 per thousand cubic feet (Mcf), the upper limit of which indicates an increase from the year-ago figure of $4.30.

Therefore, increased production, and improved oil and gas prices are likely to have led to a year-over-year rise in profit levels. However, it expects a $600-million profit hit due to the Concho Resources acquisition and related hedges. Moreover, the Winter Storm Uri might have partially affected its upstream operations in the March quarter.

What the Quantitative Model Suggests

Our proven model does not conclusively predict an earnings beat for ConocoPhillips 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. That is not the case here as you will see below.

Earnings ESP: ConocoPhillips has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate for the quarter are currently pegged at 57 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: ConocoPhillips currently carries a Zacks Rank #3.

Stocks That Warrant a Look

While an earnings beat looks uncertain for ConocoPhillips, here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

NOW Inc. (DNOW - Free Report) has an Earnings ESP of +31.37% and a Zacks Rank of 2. It is scheduled to report first-quarter results on May 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

EQT Corporation (EQT - Free Report) has an Earnings ESP of +4.40% and is a Zacks #3 Ranked player. The company is scheduled to release first-quarter results on May 5. 

Cimarex Energy Co. (XEC - Free Report) has an Earnings ESP of +18.41% and a Zacks Rank of 3. It is scheduled to report first-quarter results on May 5.

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