Coterra Energy (CTRA Quick QuoteCTRA - Free Report) is slated to release fourth-quarter 2024 results on Feb. 24, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) and revenues is pegged at 42 cents and $1.4 billion, respectively. 

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The earnings estimates for the to-be-reported quarter have been revised downward by a penny over the past 30 days. The bottom-line projection indicates a decline of 19.2% from the year-ago reported number. The Zacks Consensus Estimate for quarterly revenues, meanwhile, suggests a year-over-year decrease of 12.3%.

For full-year 2024, the Zacks Consensus Estimate for CTRA’s revenues is pegged at $5.5 billion, implying a drop of 7.4% year over year. The consensus mark for 2024 EPS is pegged at $1.60, indicating a contraction of around 29.2%.

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In the trailing four quarters, the Houston, TX-based gas exporter surpassed EPS estimates once and missed in the other three, as reflected in the chart below.

Coterra Energy Profile

Coterra Energy is an independent upstream operator engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. Headquartered in Houston, TX, the firm is focused on the Permian Basin, Marcellus Shale and Anadarko Basin. The company got its current form following the October 2021 merger between Cabot Oil & Gas Corporation and Cimarex Energy Co.

Earnings Whispers

Our proven model predicts an earnings beat for Coterra Energy this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

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CTRA has an Earnings ESP of +0.89% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

What’s Shaping Q4 Results?

Coterra's $3.95 billion acquisition of Franklin Mountain Energy and Avant Natural Resources strengthens its position in New Mexico’s lucrative Permian Basin. This consolidation allows for longer, more efficient wells and reduces location costs, increasing overall profitability. With a higher percentage of oil in production, the newly acquired acreage diversifies revenue streams, enabling the company to perform under varying commodity price scenarios. Importantly, this allows CTRA to compensate for the weakness in natural gas prices that has affected its revenue stream.

Coterra’s strategic shift toward its oil-rich assets in the Delaware Basin, while reducing capex on natural gas, is expected to have positioned it to capitalize on robust oil prices. In the third quarter, the company’s oil volumes surpassed the guidance. We expect this uptick to have continued in the third quarter.

Consequently, the Zacks Consensus Estimate for the company’s fourth-quarter crude volume is pegged at 110 thousand barrels (MBbl) per day, down from the year-ago quarter’s level of 105 MBbl per day. In the Permian, improved drilling efficiencies have driven well costs down significantly. This focus on capital efficiency positions Coterra for consistent oil growth and robust returns.

Price Performance & Valuation

The market appears to have taken a strong liking to the company over the past six months. During this time, the energy explorer's stock has risen 16%, outpacing the S&P 500’s 10% gain. Coterra has also outperformed the broader Oil/Energy sector, its subindustry, and competitors like Ovintiv (OVV Quick QuoteOVV - Free Report) . This momentum reflects growing investor confidence, fueled by the company’s strategic expansion efforts, strong operational execution, and well-planned acquisitions.

CTRA, OVV 6 Month Stock Performance

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CTRA looks appealing from a valuation standpoint, confirmed by a Zacks Value Score of B. When comparing its EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) — a common measure of a company’s worth — it stands out as competitive against its peers. Even if we look at the price/earnings ratio, Coterra’s shares currently trade at around 9X forward earnings multiple. This is in line with the subsector.

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Assessing Coterra Energy’s Prospects: Buy the Stock

Coterra Energy is positioning itself for long-term growth with strategic acquisitions and operational efficiency. The company’s asset purchase in late 2024 is set to boost production significantly through 2025, strengthening its foothold in the Permian Basin. Financially, Coterra remains robust, generating in excess of $ billion in free cash flow in the most recent quarter, with a low debt-to-capitalization of 13.7%, ensuring stability. Additionally, Coterra Energy secured NGL export contracts to Europe and Asia from 2027 to 2038, providing revenue diversification and insulation from domestic market fluctuations. The company’s cost-cutting initiatives, including a 12% reduction in drilling expenses, further enhance profitability.

Investors have taken notice — CTRA has outperformed the broader energy sector, gaining 16% in six months. With strong financials, expanding production, and strategic international deals, Coterra remains well-positioned for future growth. In other words, the stock presents a compelling investment opportunity.