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Is a Beat Likely for Diamondback (FANG) in Q3 Earnings?

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Diamondback Energy, Inc. (FANG - Free Report) is set to release third-quarter 2021 results on Monday Nov 1, after the closing bell.

The current Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $2.80 per share and the same for revenues stands at $1.51 billion.

Against this backdrop, let’s consider the factors that are likely to impact the company’s September-quarter results.

Factors Likely to Impact Q3 Results

The twin acquisitions of Energen Corporation and Ajax Resources in 2018 transformed Diamondback into one of the leading Permian Basin oil producers, driving significant production growth for the company, a trend that most likely continued in the third quarter as well.

The Zacks Consensus Estimate for oil and natural gas production is pegged at 394,943 barrels of oil equivalent per day (Boe/d), implying an increase from the year-ago quarter’s reported figure of 287,315 Boe/d.

This Permian pure play’s top line benefited from the sequential increase in average realized unhedged crude oil price during the second quarter, a trend that most likely continued in the third quarter as well. The Zacks Consensus Estimate for the September quarter’s average realized crude oil price is pegged at $67 per barrel, indicating an increase from the sequential quarter's reported figure of $63.22.

Hence, the estimated increase in output from the year-ago quarter’s reported figure and the sequential increase in average price realization of crude oil are likely to boost Diamondback’s third-quarter results.

What Does Our Model Say?

Our proven Zacks model predicts an earnings beat for Diamondback 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 beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Diamondback has an Earnings ESP of +2.48%.

Zacks Rank: Diamondback currently has a Zacks Rank #2, which increases the predictive power of ESP.

You can see  the complete list of today’s Zacks #1 Rank stocks here.

Highlights of Q2 Earnings & Surprise History

Diamondback delivered strong second-quarter 2021 earnings. Better-than-expected production led to this outperformance. Overall volumes were 401.5 thousand barrels of oil equivalent per day (MBOE/d), beating the Zacks Consensus Estimate of 389.8 MBOE/d.

The company’s adjusted net income per share of $2.40 surpassed the Zacks Consensus Estimate of $2.25 as well as the year-ago quarter’s earnings of 15 cents.

This Permian pure play’s quarterly revenues of $1.68 billion outperformed the Zacks Consensus Estimate of $1.36 billion and also increased from the year-earlier figure of $425 million.

As far as the earnings surprise track is concerned, this Midland, TX-based company shows a solid record with its bottom line having surpassed the Zacks Consensus Estimate in all the trailing four quarterly reports, the average being 27.42%. This is depicted in the graph below:

Diamondback Energy, Inc. Price and EPS Surprise

Diamondback Energy, Inc. Price and EPS Surprise

Diamondback Energy, Inc. price-eps-surprise | Diamondback Energy, Inc. Quote

Other Stocks to Consider

Some other firms worth considering from the  energy  space with the right combination of elements to beat on earnings this season are as follows:

Whiting Petroleum Corporation has an Earnings ESP of +5.63% and a Zacks Rank #1, currently. The firm is scheduled to release earnings on Nov 4.

Targa Resources Corp. (TRGP - Free Report) has an Earnings ESP of +15.01% and a Zacks Rank of 1 at present. The firm is scheduled to release earnings on Nov 4.

TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +2.53% and is presently Zacks #3 Ranked. The firm is scheduled to release earnings on Nov 5.


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