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The Zacks Analyst Blog Highlights Exxon Mobil, PBF Energy, Precision Drilling and Baker Hughes

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For Immediate Release

Chicago, IL – July 11, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Exxon Mobil Corporation (XOM - Free Report) , PBF Energy Inc. (PBF - Free Report) , Precision Drilling Corp. (PDS - Free Report) and Baker Hughes Co. (BKR - Free Report) .

Here are highlights from Monday’s Analyst Blog:

3 Stocks to Beat on Q2 Earnings Despite Exxon's Bearish Outlook

By the second half of this month, energy players will start releasing second-quarter 2023 earnings. Thus, investors are keeping their eyes closed on these companies. In the meantime, Exxon Mobil Corporation 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., Precision Drilling Corp. and Baker Hughes Co., 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.

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.

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.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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