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Why Is Diamondback (FANG) Down 15.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 15.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Diamondback 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.
Diamondback Q3 Earnings Niss, Revenues Top Beat
Diamondback reported third-quarter 2022 adjusted earnings per share of $6.48, lagging the Zacks Consensus Estimate of $6.51. The underperformance reflects a lower-than-expected oil price, to go with higher expenses.
However, FANG’s bottom line was significantly above the year-earlier quarter’s adjusted profit of $2.94 per share, backed by the positive effects of surging natural gas realizations.
Revenues of $2.4 billion outpaced the Zacks Consensus Estimate by 2.3% and increased 27.6% from the year-ago quarter’s sales of $1.9 billion.
In more news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 75 cents per share to its common shareholders of record on Nov 17. The payout will be made on Nov 25. In addition to the regular dividend, FANG declared a special dividend of $1.51 per share.
The company also executed $472 million of share repurchases during the third quarter of 2022 at $120.50 apiece.
Production & Realized Prices
FANG’s production of oil and natural gas averaged 390,630 barrels of oil equivalent per day (BOE/d), which comprises 57% oil. The figure fell 3.4% from the year-ago quarter but surpassed the Zacks Consensus Estimate of 374,515 BOE/d. While crude output was down 6.4% year over year, natural gas volumes edged up 0.5% for the third quarter of 2021.
The average realized oil price during the most recent quarter was $89.79 per barrel, 31.5% higher than the year-ago realization of $68.27 but below the consensus mark of $94. Meanwhile, the average realized natural gas price jumped to $6.46 per thousand cubic feet (Mcf) from $3.34 in the year-ago period and beat the Zacks Consensus Estimate of $5.57. Overall, the company fetched $67.25 per barrel compared with $51 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $11.97 per barrel of oil equivalent (BOE), up 20.1% from the prior-year quarter. Lease operating expense was $5.09 per BOE compared with $4.19 in the third quarter of 2021. FANG’s production taxes shot up 30.3% year over year to $4.34 per BOE. Gathering and transportation expenses increased in the third quarter of 2022 to $1.98 per BOE from $1.80 during the corresponding period of 2021.
Diamondback spent $491 million in capital expenditure — $422 million on drilling and completion, $42 million on infrastructure, environment and $27 million on midstream. The company booked $1.2 billion of free cash flows in the third quarter.
As of Sep 30, the Permian-focused operator had approximately $27 million in cash and cash equivalents, and $5.3 billion in long-term debt, representing a debt-to-capitalization of 26.9%.
Guidance
In 2022, FANG said it looks to pump 385,000-386,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be 223,000-224,000 barrels per day. The company forecast a capital spending budget between $1.935 billion and $1.950 billion. Finally, stressing on its shareholder return program, Diamondback has committed to return half of the free cash flow through dividends and buybacks.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Diamondback has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Diamondback (FANG) Down 15.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 15.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Diamondback 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.
Diamondback Q3 Earnings Niss, Revenues Top Beat
Diamondback reported third-quarter 2022 adjusted earnings per share of $6.48, lagging the Zacks Consensus Estimate of $6.51. The underperformance reflects a lower-than-expected oil price, to go with higher expenses.
However, FANG’s bottom line was significantly above the year-earlier quarter’s adjusted profit of $2.94 per share, backed by the positive effects of surging natural gas realizations.
Revenues of $2.4 billion outpaced the Zacks Consensus Estimate by 2.3% and increased 27.6% from the year-ago quarter’s sales of $1.9 billion.
In more news for investors, the company is using the excess cash from a supportive environment to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 75 cents per share to its common shareholders of record on Nov 17. The payout will be made on Nov 25. In addition to the regular dividend, FANG declared a special dividend of $1.51 per share.
The company also executed $472 million of share repurchases during the third quarter of 2022 at $120.50 apiece.
Production & Realized Prices
FANG’s production of oil and natural gas averaged 390,630 barrels of oil equivalent per day (BOE/d), which comprises 57% oil. The figure fell 3.4% from the year-ago quarter but surpassed the Zacks Consensus Estimate of 374,515 BOE/d. While crude output was down 6.4% year over year, natural gas volumes edged up 0.5% for the third quarter of 2021.
The average realized oil price during the most recent quarter was $89.79 per barrel, 31.5% higher than the year-ago realization of $68.27 but below the consensus mark of $94. Meanwhile, the average realized natural gas price jumped to $6.46 per thousand cubic feet (Mcf) from $3.34 in the year-ago period and beat the Zacks Consensus Estimate of $5.57. Overall, the company fetched $67.25 per barrel compared with $51 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $11.97 per barrel of oil equivalent (BOE), up 20.1% from the prior-year quarter. Lease operating expense was $5.09 per BOE compared with $4.19 in the third quarter of 2021. FANG’s production taxes shot up 30.3% year over year to $4.34 per BOE. Gathering and transportation expenses increased in the third quarter of 2022 to $1.98 per BOE from $1.80 during the corresponding period of 2021.
Diamondback spent $491 million in capital expenditure — $422 million on drilling and completion, $42 million on infrastructure, environment and $27 million on midstream. The company booked $1.2 billion of free cash flows in the third quarter.
As of Sep 30, the Permian-focused operator had approximately $27 million in cash and cash equivalents, and $5.3 billion in long-term debt, representing a debt-to-capitalization of 26.9%.
Guidance
In 2022, FANG said it looks to pump 385,000-386,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be 223,000-224,000 barrels per day. The company forecast a capital spending budget between $1.935 billion and $1.950 billion. Finally, stressing on its shareholder return program, Diamondback has committed to return half of the free cash flow through dividends and buybacks.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Diamondback has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.