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Why Is PDC Energy (PDCE) Down 5.6% Since Last Earnings Report?

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It has been about a month since the last earnings report for PDC Energy . Shares have lost about 5.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is PDC Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

PDC Energy Q3 Earnings Miss Estimate, Sales Beat

PDC Energy reported reported adjusted earnings per share of $3.77, missing the Zacks Consensus Estimate of $4.13. The underperformance reflects lower-than-expected production numbers.

However, PDCE's bottom line was above the year-earlier quarter’s adjusted profit of $2.33 per share, backed by higher commodity prices.

Meanwhile, PDC Energy recorded total revenues of 1.5 billion, soaring from the year-ago level of $486.4 million and exceeding the consensus mark by 42.1%.

The company is using the excess cash from a supportive environment to reward investors with dividends and buybacks. As part of that, PDCE’s board of directors declared a quarterly cash dividend of 35 cents per share to its common shareholders. In fact, PDC Energy returned $295 million to its shareholders during the third quarter through dividends and buybacks.

Production & Prices

For the third quarter of 2022, PDC Energy’s production totaled 22,980 thousand barrels of oil equivalent/MBoe (62% liquids), reflecting an increase of 22.5% from 18,764 MBoe a year ago. However, the Colorado-focused company’s quarterly average daily production of 250,000 Boe came in below the Zacks Consensus Estimate of 251,540 Boe due to certain operational issues. Of the aggregate output, 20,153 MBoe (or some 88%) came from Wattenberg Field and the rest from Delaware Basin.

The average realized natural gas price more than doubled from $3 per thousand cubic feet (Mcf) in the year-ago quarter to $6.03. PDC Energy sold NGLs at an average price of $29.75 per barrel (Bbls) compared to $28.33 a year ago. Meanwhile, the average oil price realization came in at $91.88 per barrel, 32.8% higher than $69.17 in the year-ago period. Overall, PDC Energy fetched $52.25 per MBoe compared with $37.47 a year ago.

Capital Expenditure & Balance Sheet

The energy explorer shelled out $240.2 million in the form of oil and gas capital investments, while it raked in $440 million in adjusted free cash flow. As of Sep 30, PDC Energy had approximately $45.6 million in cash and cash equivalents, and $1.4 billion in long-term debt, representing a debt-to-capitalization of 25.9%.

Guidance

For 2022, PDC Energy still expects to pump 230,000-240,000 Boe per day of hydrocarbon. It also reaffirmed its average oil production expectation of 73,000-77,000 barrels per day. The Zacks Rank #3 (Hold) company forecast capital spending of approximately $1.075 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, PDC Energy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PDC Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

PDC Energy belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Southwestern Energy (SWN - Free Report) , has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Southwestern Energy reported revenues of $4.54 billion in the last reported quarter, representing a year-over-year change of +184.2%. EPS of $0.32 for the same period compares with $0.24 a year ago.

For the current quarter, Southwestern Energy is expected to post earnings of $0.30 per share, indicating a change of -3.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.3% over the last 30 days.

Southwestern Energy has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.


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