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Tale of the Tape

Zacks Equity Research

Why Diamondback Energy (FANG) Could Beat Earnings Estimates Again
October 18, 2016

FANG

Trades from $3

Looking for a stock that might be in a good position to beat earnings at its next report? Consider Diamondback Energy, Inc. (FANG - Free Report) , a firm in the US Oil Exploration & Production industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, FANG has beaten estimates by at least 70% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, FANG expected to post a loss of 5 cents per share, while it actually produced earnings of 2 cents per share, a beat of 140%. Meanwhile, for the most recent quarter, the company looked to deliver earnings of 15 cents per share, when it actually saw earnings of 26 cents per share instead, representing a 73.3% positive surprise.

DIAMONDBACK EGY Price and EPS Surprise

DIAMONDBACK EGY Price and EPS Surprise | DIAMONDBACK EGY Quote

Thanks in part to this history, recent estimates have been moving higher for Diamondback Energy. In fact, the Earnings ESP for FANG is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for FANG, as the firm currently has a Zacks Earnings ESP of 9.09%, so another beat could be around the corner.

This is particularly true when you consider that FANG has a great Zacks Rank #1 (Strong Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that FANG could see another beat at its next report, especially if recent trends are any guide.

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