We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Stocks to Beat on Q2 Earnings Despite XOM's Downbeat View
Read MoreHide Full Article
By the second half of this month, energy players will start releasing second-quarter 2023 earnings. Thus, investors are keeping their eyes close on these companies. In the meantime, Exxon Mobil Corporation (XOM) announced its expectations for a significant drop in profit, citing declining natural gas prices and lower refining margins as the key reasons.
However, investors should not steer clear of energy companies as there are several players, such as PBF Energy Inc. (PBF - Free Report) , Precision Drilling Corporation (PDS - Free Report) and Baker Hughes Company (BKR - Free Report) , which are expected to beat earnings estimates in the second quarter.
Oil & Gas Prices Unimpressive
The pricing scenario of oil and natural gas was not impressive in the second quarter of this year. Per data provided by the U.S. Energy Information Administration (“EIA”), the average West Texas Intermediate crude prices per barrel in April, May and June were $79.45, $71.58 and $70.25, respectively. In comparison, in the respective year-ago months, average oil prices were $101.78, $109.55 and $114.84, according to EIA’s data.
Worries over a recession and economic slowdown possibly hurt oil and gas prices in the June-end quarter. Thus, like oil, the price of natural gas was lower significantly, thereby hurting the exploration and production activities of the major energy players.
ExxonMobil Expresses Concerns for Q2 Earnings
Among the leading energy players, ExxonMobil, in its recent SEC filing, expressed concerns over lower natural gas prices hurting its second-quarter earnings. XOM projects its upstream business’s earnings in the second quarter to be hurt by $1.8-$2.2 billion sequentially. ExxonMobil also expects its Energy Products business unit to be affected by $2-$2.2 billion in the June-end quarter, owing to lower industry margins.
How to Pick the Right Stocks?
Despite the negative backdrop, there are still some energy stocks that seem well-positioned to beat earnings estimates in the second quarter. However, it is by no means an easy task for investors to arrive at picks that have the potential to deliver better-than-expected earnings.
While there is no fool-proof method of picking outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks that have high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Choices
PBF Energy, a leading North American refiner, is likely to have benefited from refined product production, primarily on the East Coast.
Precision Drilling is a well-known name in the energy space, providing customers access to an extensive fleet of Super Series drilling rigs. Strict cost-control initiatives and disciplined capital allocation are likely to have aided PDS. Precision Drilling, scheduled to report earnings on Jul 27, has an Earnings ESP of +2.02% and a Zacks Rank of 3.
Precision Drilling Corporation Price and EPS Surprise
Baker Hughes is a leading oilfield service player and is likely to have benefited from its improved Oilfield Services and Equipment business unit. BKR, scheduled to release earnings on Jul 19, has an Earnings ESP of +1.36% and a Zacks Rank #3.
Image: Bigstock
3 Stocks to Beat on Q2 Earnings Despite XOM's Downbeat View
By the second half of this month, energy players will start releasing second-quarter 2023 earnings. Thus, investors are keeping their eyes close on these companies. In the meantime, Exxon Mobil Corporation (XOM) announced its expectations for a significant drop in profit, citing declining natural gas prices and lower refining margins as the key reasons.
However, investors should not steer clear of energy companies as there are several players, such as PBF Energy Inc. (PBF - Free Report) , Precision Drilling Corporation (PDS - Free Report) and Baker Hughes Company (BKR - Free Report) , which are expected to beat earnings estimates in the second quarter.
Oil & Gas Prices Unimpressive
The pricing scenario of oil and natural gas was not impressive in the second quarter of this year. Per data provided by the U.S. Energy Information Administration (“EIA”), the average West Texas Intermediate crude prices per barrel in April, May and June were $79.45, $71.58 and $70.25, respectively. In comparison, in the respective year-ago months, average oil prices were $101.78, $109.55 and $114.84, according to EIA’s data.
Worries over a recession and economic slowdown possibly hurt oil and gas prices in the June-end quarter. Thus, like oil, the price of natural gas was lower significantly, thereby hurting the exploration and production activities of the major energy players.
ExxonMobil Expresses Concerns for Q2 Earnings
Among the leading energy players, ExxonMobil, in its recent SEC filing, expressed concerns over lower natural gas prices hurting its second-quarter earnings. XOM projects its upstream business’s earnings in the second quarter to be hurt by $1.8-$2.2 billion sequentially. ExxonMobil also expects its Energy Products business unit to be affected by $2-$2.2 billion in the June-end quarter, owing to lower industry margins.
How to Pick the Right Stocks?
Despite the negative backdrop, there are still some energy stocks that seem well-positioned to beat earnings estimates in the second quarter. However, it is by no means an easy task for investors to arrive at picks that have the potential to deliver better-than-expected earnings.
While there is no fool-proof method of picking outperformers, our proprietary methodology — the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — helps identify stocks that have high chances of delivering a positive surprise in their upcoming earnings announcement. Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
The Earnings ESP shows the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our Choices
PBF Energy, a leading North American refiner, is likely to have benefited from refined product production, primarily on the East Coast.
PBF Energy currently has an Earnings ESP of +4.13% and a Zacks Rank #3. The company is scheduled to release results on Aug 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
PBF Energy Inc. Price and EPS Surprise
PBF Energy Inc. price-eps-surprise | PBF Energy Inc. Quote
Precision Drilling is a well-known name in the energy space, providing customers access to an extensive fleet of Super Series drilling rigs. Strict cost-control initiatives and disciplined capital allocation are likely to have aided PDS. Precision Drilling, scheduled to report earnings on Jul 27, has an Earnings ESP of +2.02% and a Zacks Rank of 3.
Precision Drilling Corporation Price and EPS Surprise
Precision Drilling Corporation price-eps-surprise | Precision Drilling Corporation Quote
Baker Hughes is a leading oilfield service player and is likely to have benefited from its improved Oilfield Services and Equipment business unit. BKR, scheduled to release earnings on Jul 19, has an Earnings ESP of +1.36% and a Zacks Rank #3.
Baker Hughes Company Price and EPS Surprise
Baker Hughes Company price-eps-surprise | Baker Hughes Company Quote