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Diamondback (FANG) Down 5.4% Since Last Earnings Report: Can It Rebound?
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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 5.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is 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 catalysts.
Diamondback Q3 Earnings Miss Estimates on Strong Production
Diamondback Energy reported third-quarter 2023 adjusted earnings per share of $5.49, beating the Zacks Consensus Estimate of $4.90. The outperformance primarily reflects strong production and lower costs.
However, the bottom line declined from the year-ago adjusted figure of $6.48 due to a significant drop in overall realization.
Meanwhile, revenues of $2.3 billion fell 4% from the year-ago quarter’s sales but outperformed the Zacks Consensus Estimate by $163 million.
In good news for investors, the company is using the excess cash to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 84 cents per share to its common shareholders of record on Nov 16. The payout will be made on Nov 24. In addition to the regular dividend, FANG declared a special dividend of $2.53 per share.
The company also executed $56 million of share repurchases during the third quarter of 2023 at $136.59 apiece.
Production & Realized Prices
FANG’s production of oil and natural gas averaged 452,848 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 15.9% from the year-ago quarter and surpassed our estimate of 442,803 BOE/d. While crude and natural gas output increased 18.6% and 7.9% year over year, respectively, natural gas liquids volumes rose 16.6% from the third quarter of 2022.
The average realized oil price during the most recent quarter was $81.57 per barrel, 9.2% lower than the year-ago realization of $89.79 but ahead of our projection of $71.62. Meanwhile, the average realized natural gas price plunged to $1.62 per thousand cubic feet (Mcf) from $6.46 in the year-ago period, though it came ahead of our estimate of $1.49. Overall, the company fetched $54.37 per barrel compared with $67.25 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $10.51 per barrel of oil equivalent (BOE) compared to $11.97 in the prior-year quarter and our projection of $11.50. The cutback in costs came even though lease operating expenses rose to $5.42 per BOE from $5.09 in the third quarter of 2022. FANG’s production taxes decreased 34.8% year over year to $2.83 per BOE, while gathering and transportation expenses moved down in the third quarter of 2023 to $1.75 per BOE from $1.98 during the corresponding period of 2022.
Diamondback spent $684 million in capital expenditure — $611 million on drilling and completion, $34 million on infrastructure, environment and $39 million on midstream. The company booked $820 million in free cash flows in the third quarter.
As of Sep 30, the Permian-focused operator had approximately $830 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 26.8%.
Guidance
In 2023, FANG said it looks to pump around 447,000 BOE/d of hydrocarbon, up from the prior outlook of 435,000-445,000 BOE/d. Of this, oil volumes are likely to be around 263,000 barrels per day. The company forecast a capital spending budget between $2.66 billion and $2.7 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Diamondback has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Diamondback is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Gulfport Energy (GPOR - Free Report) , a stock from the same industry, has gained 9.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Gulfport reported revenues of $266.67 million in the last reported quarter, representing a year-over-year change of +39.5%. EPS of -$1.30 for the same period compares with $3.69 a year ago.
Gulfport is expected to post earnings of $4.91 per share for the current quarter, representing a year-over-year change of +54.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
Gulfport has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Diamondback (FANG) Down 5.4% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Diamondback Energy (FANG - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is 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 catalysts.
Diamondback Q3 Earnings Miss Estimates on Strong Production
Diamondback Energy reported third-quarter 2023 adjusted earnings per share of $5.49, beating the Zacks Consensus Estimate of $4.90. The outperformance primarily reflects strong production and lower costs.
However, the bottom line declined from the year-ago adjusted figure of $6.48 due to a significant drop in overall realization.
Meanwhile, revenues of $2.3 billion fell 4% from the year-ago quarter’s sales but outperformed the Zacks Consensus Estimate by $163 million.
In good news for investors, the company is using the excess cash to reward them with dividends and buybacks. As part of that, FANG’s board of directors declared a quarterly cash dividend of 84 cents per share to its common shareholders of record on Nov 16. The payout will be made on Nov 24. In addition to the regular dividend, FANG declared a special dividend of $2.53 per share.
The company also executed $56 million of share repurchases during the third quarter of 2023 at $136.59 apiece.
Production & Realized Prices
FANG’s production of oil and natural gas averaged 452,848 barrels of oil equivalent per day (BOE/d), comprising 59% oil. The figure was up 15.9% from the year-ago quarter and surpassed our estimate of 442,803 BOE/d. While crude and natural gas output increased 18.6% and 7.9% year over year, respectively, natural gas liquids volumes rose 16.6% from the third quarter of 2022.
The average realized oil price during the most recent quarter was $81.57 per barrel, 9.2% lower than the year-ago realization of $89.79 but ahead of our projection of $71.62. Meanwhile, the average realized natural gas price plunged to $1.62 per thousand cubic feet (Mcf) from $6.46 in the year-ago period, though it came ahead of our estimate of $1.49. Overall, the company fetched $54.37 per barrel compared with $67.25 a year ago.
Costs & Financial Position
Diamondback’s third-quarter cash operating cost was $10.51 per barrel of oil equivalent (BOE) compared to $11.97 in the prior-year quarter and our projection of $11.50. The cutback in costs came even though lease operating expenses rose to $5.42 per BOE from $5.09 in the third quarter of 2022. FANG’s production taxes decreased 34.8% year over year to $2.83 per BOE, while gathering and transportation expenses moved down in the third quarter of 2023 to $1.75 per BOE from $1.98 during the corresponding period of 2022.
Diamondback spent $684 million in capital expenditure — $611 million on drilling and completion, $34 million on infrastructure, environment and $39 million on midstream. The company booked $820 million in free cash flows in the third quarter.
As of Sep 30, the Permian-focused operator had approximately $830 million in cash and cash equivalents, and $6.2 billion in long-term debt, representing a debt-to-capitalization of 26.8%.
Guidance
In 2023, FANG said it looks to pump around 447,000 BOE/d of hydrocarbon, up from the prior outlook of 435,000-445,000 BOE/d. Of this, oil volumes are likely to be around 263,000 barrels per day. The company forecast a capital spending budget between $2.66 billion and $2.7 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
Currently, Diamondback has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Diamondback has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Diamondback is part of the Zacks Oil and Gas - Exploration and Production - United States industry. Over the past month, Gulfport Energy (GPOR - Free Report) , a stock from the same industry, has gained 9.1%. The company reported its results for the quarter ended September 2023 more than a month ago.
Gulfport reported revenues of $266.67 million in the last reported quarter, representing a year-over-year change of +39.5%. EPS of -$1.30 for the same period compares with $3.69 a year ago.
Gulfport is expected to post earnings of $4.91 per share for the current quarter, representing a year-over-year change of +54.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
Gulfport has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.