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Ovintiv (OVV) Up 1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Ovintiv (OVV - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ovintiv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ovintiv Reports Better-Than-Expected Q2 Earnings
Ovintiv reported second-quarter 2021 adjusted earnings per share of $1.11, beating the Zacks Consensus Estimate of $1.06. However, the year-ago bottom line was a loss of 43 cents. This upside in results can be attributed to higher commodity price realization and successful cost-control initiatives.
Even though total revenues of $1.69 billion missed the Zacks Consensus Estimate of $1.81 billion, the same improved 1.33% from the year-ago sales of $726 million.
Ovintiv’s board of directors declared a quarterly dividend of 14 cents per share for its common shareholders of record as of Sep 15, 2021, which will be paid out on Sep 30. This signifies a 50% hike in its quarterly dividend payout from its previous levels of 9.375 cents.
Production and Prices
Total second-quarter production came in at 554,600 barrels of oil equivalent per day (BOE/d) compared with 536,600 BOE/d in the prior-year period. The rise in volumes was in response to a balanced commodity mix. Natural gas production rose 3.7% year over year to 1,607 million cubic feet per day while liquids production was up 3% to 286,700 BOE/d.
Ovintiv's realized natural gas price was $2.74 per thousand cubic feet compared with the year-ago level of $2.09. Realized oil price increased to $51.27 per barrel from $39.7 in the second quarter of 2020.
Costs, Capex and Balance Sheet
Total expenses decreased to $1.8 billion from the year-ago figure of $4.8 billion. This decline is primarily attributed to lower depreciation, depletion and amortization charges.
Ovintiv’s cash from operating activities in the quarter under review summed $750 million, up from the year-ago figure of $117 million. The company's capital investments were $383 million compared with $252 million in the year-ago period.
As of June 30, Ovintiv had cash and cash equivalents worth $122 million, and a long-term debt of $4.8 billion. Its debt-to-capitalization ratio was 54.9.
The company generated non-GAAP free cash flow of $350 million.
In the second quarter, Ovintiv advanced its $4.5-billion net debt objective to 2021 end from its initial target date of 2022 end. Since the second quarter of 2020, this objective has reduced net debt by roughly $3 billion.
The company set a new net debt target of $3 billion, which it intends to meet by the end of 2023, assuming oil prices to be trending at $50 per barrel and natural gas prices at $2.75 per Mcf on the NYMEX. Ovintiv aims to accomplish this goal without funds from asset sales.
Guidance
Ovintiv reaffirms its 2021 capital expenditure at $1.5 billion. Following its assets' significant output outperformance, the company now projects crude oil and condensate volumes to average between 190,000 barrels per day (bpd) and 195,000 bpd in 2021 compared with its prior guidance of 190,000 bpd.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 10.34% due to these changes.
VGM Scores
Currently, Ovintiv has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ovintiv has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Ovintiv (OVV) Up 1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Ovintiv (OVV - Free Report) . Shares have added about 1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Ovintiv due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Ovintiv Reports Better-Than-Expected Q2 Earnings
Ovintiv reported second-quarter 2021 adjusted earnings per share of $1.11, beating the Zacks Consensus Estimate of $1.06. However, the year-ago bottom line was a loss of 43 cents. This upside in results can be attributed to higher commodity price realization and successful cost-control initiatives.
Even though total revenues of $1.69 billion missed the Zacks Consensus Estimate of $1.81 billion, the same improved 1.33% from the year-ago sales of $726 million.
Ovintiv’s board of directors declared a quarterly dividend of 14 cents per share for its common shareholders of record as of Sep 15, 2021, which will be paid out on Sep 30. This signifies a 50% hike in its quarterly dividend payout from its previous levels of 9.375 cents.
Production and Prices
Total second-quarter production came in at 554,600 barrels of oil equivalent per day (BOE/d) compared with 536,600 BOE/d in the prior-year period. The rise in volumes was in response to a balanced commodity mix. Natural gas production rose 3.7% year over year to 1,607 million cubic feet per day while liquids production was up 3% to 286,700 BOE/d.
Ovintiv's realized natural gas price was $2.74 per thousand cubic feet compared with the year-ago level of $2.09. Realized oil price increased to $51.27 per barrel from $39.7 in the second quarter of 2020.
Costs, Capex and Balance Sheet
Total expenses decreased to $1.8 billion from the year-ago figure of $4.8 billion. This decline is primarily attributed to lower depreciation, depletion and amortization charges.
Ovintiv’s cash from operating activities in the quarter under review summed $750 million, up from the year-ago figure of $117 million. The company's capital investments were $383 million compared with $252 million in the year-ago period.
As of June 30, Ovintiv had cash and cash equivalents worth $122 million, and a long-term debt of $4.8 billion. Its debt-to-capitalization ratio was 54.9.
The company generated non-GAAP free cash flow of $350 million.
In the second quarter, Ovintiv advanced its $4.5-billion net debt objective to 2021 end from its initial target date of 2022 end. Since the second quarter of 2020, this objective has reduced net debt by roughly $3 billion.
The company set a new net debt target of $3 billion, which it intends to meet by the end of 2023, assuming oil prices to be trending at $50 per barrel and natural gas prices at $2.75 per Mcf on the NYMEX. Ovintiv aims to accomplish this goal without funds from asset sales.
Guidance
Ovintiv reaffirms its 2021 capital expenditure at $1.5 billion. Following its assets' significant output outperformance, the company now projects crude oil and condensate volumes to average between 190,000 barrels per day (bpd) and 195,000 bpd in 2021 compared with its prior guidance of 190,000 bpd.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 10.34% due to these changes.
VGM Scores
Currently, Ovintiv has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Ovintiv has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.