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Why Is Diamondback (FANG) Down 6.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 6.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q4 Earnings Beat, Revenues Miss Estimate
Diamondback Energy reported fourth-quarter 2022 adjusted earnings per share of $5.29, beating the Zacks Consensus Estimate of $5.20 and surging from the year-ago bottom line of $3.63 per share. The outperformance reflects higher-than-expected production.
Meanwhile, revenues of $2 billion managed to scrape past the year-ago quarter’s sales by $8 million but fell just short of the Zacks Consensus Estimate (by 0.1%) due to lower overall realization.
In good 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 80 cents per share to its common shareholders of record on Mar 3. The payout, up some 7% from the last one, will be made on Mar 10. In addition to the regular dividend, FANG declared a special dividend of $2.15 per share.
The company also executed $316 million of share repurchases during the fourth quarter of 2022 at $134.49 apiece.
Production & Realized Prices
FANG’s production of oil and natural gas averaged 391,402 barrels of oil equivalent per day (BOE/d), comprising 58% oil. The figure edged up 1.1% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 389,984 BOE/d. While crude and natural gas output were essentially flat year over year, natural gas liquids volumes increased 6.2% from the fourth quarter of 2021.
The average realized oil price during the most recent quarter was $80.37 per barrel, 7.9% higher than the year-ago realization of $74.50 but below the consensus mark of $83. Meanwhile, the average realized natural gas price fell to $3.20 per thousand cubic feet (Mcf) from $4.56 in the year-ago period and missed the Zacks Consensus Estimate of $3.85. Overall, the company fetched $55.76 per barrel compared with $56.47 a year ago.
Costs & Financial Position
Diamondback’s fourth-quarter cash operating cost was $10.16 per barrel of oil equivalent (BOE), literally unchanged from the prior-year quarter. Lease operating expense was $4.47 per BOE compared with $4.21 in the fourth quarter of 2021. FANG’s production taxes decreased 5.3% year over year to $3.22 per BOE. On the other hand, gathering and transportation expenses shot up in the fourth quarter of 2022 to $1.86 per BOE from $1.63 during the corresponding period of 2021.
Diamondback spent $542 million in capital expenditure — $482 million on drilling and completion, $45 million on infrastructure, environment and $15 million on midstream. The company booked $1.1 billion of free cash flows in the fourth quarter.
As of Dec 31, the Permian-focused operator had approximately $157 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 28.5%.
Guidance
In 2023, FANG said it looks to pump 430,000-440,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be 256,000-262,000 barrels per day. The company forecast a capital spending budget between $2.5 billion and $2.7 billion. Finally, stressing its shareholder return program, Diamondback has committed to return at least 75% of the free cash flow through dividends and buybacks.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -11.17% due to these changes.
VGM Scores
Currently, Diamondback has a nice Growth Score of B, 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, 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 6.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 6.8% 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 the most recent earnings report in order to get a better handle on the important drivers.
Diamondback Q4 Earnings Beat, Revenues Miss Estimate
Diamondback Energy reported fourth-quarter 2022 adjusted earnings per share of $5.29, beating the Zacks Consensus Estimate of $5.20 and surging from the year-ago bottom line of $3.63 per share. The outperformance reflects higher-than-expected production.
Meanwhile, revenues of $2 billion managed to scrape past the year-ago quarter’s sales by $8 million but fell just short of the Zacks Consensus Estimate (by 0.1%) due to lower overall realization.
In good 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 80 cents per share to its common shareholders of record on Mar 3. The payout, up some 7% from the last one, will be made on Mar 10. In addition to the regular dividend, FANG declared a special dividend of $2.15 per share.
The company also executed $316 million of share repurchases during the fourth quarter of 2022 at $134.49 apiece.
Production & Realized Prices
FANG’s production of oil and natural gas averaged 391,402 barrels of oil equivalent per day (BOE/d), comprising 58% oil. The figure edged up 1.1% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 389,984 BOE/d. While crude and natural gas output were essentially flat year over year, natural gas liquids volumes increased 6.2% from the fourth quarter of 2021.
The average realized oil price during the most recent quarter was $80.37 per barrel, 7.9% higher than the year-ago realization of $74.50 but below the consensus mark of $83. Meanwhile, the average realized natural gas price fell to $3.20 per thousand cubic feet (Mcf) from $4.56 in the year-ago period and missed the Zacks Consensus Estimate of $3.85. Overall, the company fetched $55.76 per barrel compared with $56.47 a year ago.
Costs & Financial Position
Diamondback’s fourth-quarter cash operating cost was $10.16 per barrel of oil equivalent (BOE), literally unchanged from the prior-year quarter. Lease operating expense was $4.47 per BOE compared with $4.21 in the fourth quarter of 2021. FANG’s production taxes decreased 5.3% year over year to $3.22 per BOE. On the other hand, gathering and transportation expenses shot up in the fourth quarter of 2022 to $1.86 per BOE from $1.63 during the corresponding period of 2021.
Diamondback spent $542 million in capital expenditure — $482 million on drilling and completion, $45 million on infrastructure, environment and $15 million on midstream. The company booked $1.1 billion of free cash flows in the fourth quarter.
As of Dec 31, the Permian-focused operator had approximately $157 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 28.5%.
Guidance
In 2023, FANG said it looks to pump 430,000-440,000 BOE/d of hydrocarbon. Of this, oil volumes are likely to be 256,000-262,000 barrels per day. The company forecast a capital spending budget between $2.5 billion and $2.7 billion. Finally, stressing its shareholder return program, Diamondback has committed to return at least 75% of the free cash flow through dividends and buybacks.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -11.17% due to these changes.
VGM Scores
Currently, Diamondback has a nice Growth Score of B, 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, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.