It has been about a month since the last earnings report for Magnolia Oil & Gas Corp (MGY Quick QuoteMGY - Free Report) . Shares have lost about 14.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Magnolia Oil & Gas Corp due for a breakout? 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 catalysts.

Magnolia Q4 Earnings Beat Estimate

Magnolia reported fourth-quarter adjusted net income of 86 cents per share, beating the Zacks Consensus Estimate of 76 cents and improving from the year-ago quarter’s bottom line of 82 cents.

The outperformance in the bottom line can be primarily attributed to higher oil prices.

Total revenues came in at $349 million, underperforming the Zacks Consensus Estimate of $352 million on lower-than-expected production. However, the top line increased 5.1% from the year-ago level of $332.2 million.

Magnolia declared a regular quarterly cash dividend of 11.5 cents per share, payable on Mar 1.

Production & Prices

South Texas-focused Magnolia’s oil and gas production reported a year-over-year increase of a little more than 6.3% to 73,785 barrels of oil equivalent per day (boe/d), but missed the Zacks Consensus Estimate of 77,089 boe/d. Oil volumes at 32,307 barrels per day (bpd) were up 4.5% from the 2021 fourth-quarter level. But the same underperformed the Zacks Consensus Estimate of 34,431 bpd. Daily natural gas volumes increased 5.4% from the year-ago period to 135,380 thousand cubic feet, while natural gas liquids output was up 10.7%.

The average realized crude oil price in the fourth quarter was $82.53 per barrel, indicating an 8.4% increase from the year-ago period’s figure of $76.16. On the other hand, the average realized natural gas liquid price was $25.45 per barrel, down 28.1% from the year-ago period’s tally.

Meanwhile, natural gas prices dropped 5.9% year over year to $4.77 per thousand cubic feet. Overall, MGY fetched $51.42 per barrel of oil equivalent compared with $52.01 a year ago.

Balance Sheet & Capital Expenditure

As of Dec 31, Magnolia had $675.4 million of cash and cash equivalents. The oil explorer had a long-term debt of $390.4 million. In the reported quarter, Magnolia spent $460 million on its capital program.

The company had property, plant and equipment worth $1.53 billion on its books.

Guidance

Magnolia Oil and Gas Corporation expects drilling and completion capital to be in the range of $140 million-$150 million for the first quarter of 2023 and $490 million-$520 million for full-year 2023.

The total output in the first quarter of 2023 is expected in the range of 80,000- 82,000 boe/d range.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -18.48% due to these changes.

VGM Scores

At this time, Magnolia Oil & Gas Corp has a great 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 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Magnolia Oil & Gas Corp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.