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Is a Beat in Store for Continental (CLR) This Earnings Season?

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Continental Resources, Inc. (CLR - Free Report) is expected to beat second-quarter 2021 earnings estimates when it reports results on Aug 2, after the closing bell.

In the last reported quarter, the oil producer reported earnings of 77 cents per share, beating the Zacks Consensus Estimate of 52 cents on higher realizations of commodity prices and lower operating expenses. The upstream firm beat bottom-line estimates in two of the last four reported quarters, the average negative earnings surprise being 53.7%. 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 57 cents has witnessed one downward revision and seven upward revisions in the past 30 days. The estimated figure suggests an improvement of 180.3% from the prior-year reported number.

The consensus estimate for second-quarter revenues of $1.1 billion indicates a 536.9% jump from the year-ago reported figure.

What Our Quantitative Model Suggests

Our proven model predicts an earnings beat for Continental 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: The company’s Earnings ESP is +2.77% as the Most Accurate Estimate of 59 cents per share is pegged higher than the Zacks Consensus Estimate of 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Continental sports a Zacks Rank #1.

Factors Driving the Better-Than-Expected Earnings

The price of West Texas Intermediate crude improved more than 20% in the June quarter of this year. In comparison with the year-ago quarter, the commodity price has improved drastically. The scale of the improvement can be represented as a price surge from the pandemic-hit low mark – when oil was in the negative territory in April 2020 – to breaking the psychological barrier of $70 per barrel.

The significant improvement in the commodity pricing scenario was backed by the optimism that fuel demand will recover considerably this year, thanks to the rolling out of coronavirus vaccines at a massive scale.

Higher oil price is likely to have aided production of the leading crude producer in the United States. The Zacks Consensus Estimate for the company’s average daily production is pegged at 319 thousand barrels of oil equivalent per day (MBoE/D), indicating an improvement from the year-ago quarter’s 203 MBoE/D.  

Other Stocks That Warrant a Look

Here are a few 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:

Devon Energy Corp. (DVN - Free Report) has an Earnings ESP of +0.15% and a Zacks Rank of 1. It is scheduled to report second-quarter results on Aug 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +0.50% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 4.

Berry Corporation (BRY - Free Report) has an Earnings ESP of +12.73% and is a Zacks #2 Ranked player. The company is scheduled to release second-quarter results on Aug 3.