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Why We Expect Pioneer Natural (PXD) to Deliver Q2 Earnings Beat

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Pioneer Natural Resources Company (PXD - Free Report) is set to beat earnings estimates when it reports second-quarter 2021 results on Aug 2, after the closing bell.  

In the last reported quarter, the upstream company announced adjusted earnings of $1.77 per share, which beat the Zacks Consensus Estimate of $1.50 due to increased oil equivalent production volumes and higher realization of crude prices.

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 $2.76 has witnessed eight upward revisions and no downward movement over the past 30 days. The estimated figure suggests a massive improvement from the prior-year reported loss of 32 cents per share. Similarly, the consensus estimate for second-quarter revenues of $3.5 billion indicates a 309.7% increase from the year-ago reported figure.

In the trailing four quarters, Pioneer Natural’s earnings beat the Zacks Consensus Estimate thrice and missed the same on another occasion, with the average surprise being 20.8%. This is depicted in the graph below:

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Pioneer Natural 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 +0.36%. This is because the Most Accurate Estimate is pegged at $2.77 per share, higher than the Zacks Consensus Estimate of $2.76. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Pioneer Natural currently holds a Zacks Rank #1.

Factors Driving the Better-Than-Expected Earnings

In the second quarter, the price of crude oil improved significantly from the year-ago level, thanks to rolling out of coronavirus vaccines, which in turn brightened up the outlook for global fuel demand. The Zacks Consensus Estimate for average realized price on an oil-equivalent basis is $45.56 per barrel for the quarter, signaling a massive jump from $17.61 per barrel a year ago.

An improved commodity pricing scenario is likely to have backed the upstream energy company. Strong presence in the Permian Basin — the most prolific shale play in the United States — is expected to have helped it in increasing crude production volumes in the June quarter.

The Zacks Consensus Estimate for average crude oil production volumes is pegged at 361 thousand barrels per day (MBbls/d), indicating an increase from the prior-year level of 215 MBbls/d. Also, the consensus estimate for oil equivalent production is pegged at 620 thousand barrels of oil equivalent per day (MBoe/d), suggesting an improvement from the prior-year level of 375 MBoe/d.

Higher commodity prices and increased production are expected to have positioned the company not only for a year-over-year increase in profits but also for an earnings beat for the second quarter.

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 +1.70% 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.

Cimarex Energy Co. has an Earnings ESP of +7.27% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results on Aug 5.

Continental Resources, Inc. has an Earnings ESP of +4.62% and a Zacks Rank #1. The firm is scheduled to release quarterly earnings on Aug 2.

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