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Why We Expect Range Resources (RRC) to Deliver Q2 Earnings Beat

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Range Resources Corporation (RRC - Free Report) is set to beat earnings estimates when it reports second-quarter 2021 results on Jul 26, after the closing bell.  

In the last reported quarter, the upstream company announced adjusted earnings of 30 cents per share, which beat the Zacks Consensus Estimate of 22 cents due to increased commodity prices and decreased direct operating costs. This was partially offset by lower production volumes.

In the trailing four quarters, Range Resources’ earnings beat the Zacks Consensus Estimate twice and missed the same on the other two occasions. This is depicted in the graph below:

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

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter earnings per share of 23 cents has witnessed three upward and two downward revisions over the past 30 days. The estimated figure suggests an increase of 330% from the prior-year reported number.

Similarly, the consensus estimate for second-quarter revenues of $598.2 million indicates a 58.9% increase from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Range 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: Earnings ESP for the company is currently +3.51%. This is because the Most Accurate Estimate is pegged at 24 cents per share, higher than the Zacks Consensus Estimate of 23 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Range Resources currently sports a Zacks Rank #1.

Factors Driving the Better-Than-Expected Earnings

As Range Resources is among the top 10 natural gas producers in the United States, the favorable price of the commodity is primarily expected to have positively impacted the bottom line in the second quarter. The Zacks Consensus Estimate for second-quarter natural gas price (excluding derivatives) is pegged at $2.49 per thousand cubic feet (Mcf), signaling a rise from the year-ago level of $1.42. The effects of significant improvement in natural gas prices are expected to have offset the negative impact of lower gas production.

The consensus estimate for the company’s second-quarter natural gas production is pegged at 1,481 Mcf/d, indicating a decline from the year-ago level of 1,661 Mcf/d.

However, the Zacks Consensus Estimate for its oil production is pegged at 8.46 thousand barrels per day (MBbls/d), indicating an increase from the year-ago period’s 7.91 MBbls/d. Also, the consensus estimate for second-quarter realized oil prices (excluding derivatives) is pegged at $53 per barrel, signaling a massive rise from $14.81 a year ago. Higher oil price and production are expected to have provided a northbound thrust to the company’s bottom line.

Other Stocks to Consider

Here are some other companies from the Energy space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +6.47% and a Zacks Rank of 1. It is scheduled to report second-quarter results on Aug 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips (COP - Free Report) has an Earnings ESP of +4.34% and is a Zacks #1 Ranked player. The company is scheduled to release second-quarter results on Aug 3.

Continental Resources, Inc. (CLR - Free Report) has an Earnings ESP of +12.68% and a Zacks Rank #1. The firm is scheduled to release quarterly earnings on Aug 2.