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Hess Corporation (HES): What to Expect This Earnings Season?
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Hess Corporation (HES - Free Report) , a global exploration and production (E&P) company that develops, produces, purchases, transports and sells crude oil and natural gas, is expected to report fourth-quarter 2016 earnings on Jan 25, before the market opens.
The company topped the Zacks Consensus Estimate in three of the last four quarters with an average earnings beat of 6.44% despite persistently weak oil and gas prices.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Although oil prices remained weak in the first two months of the fourth quarter, the commodity price advanced after OPEC decided to cut production. On Nov 30, the cartel reached a historic accord to curb output in keeping with the need to recover from the weak pricing scenario. Notably, this is the first time since 2008 that OPEC signed a deal to cut oil production.
Soon after, non-OPEC players also jumped on the bandwagon to limit crude output. After the historic deal, crude started moving north and even crossed the psychological $50 per barrel mark. In fact, throughout December the commodity was sold above this level.
Overall, the last month of the fourth quarter was favorable for oil exploration and production (E&P) companies. These firms continued to gather on the oil patches in a bid to increase production. This is evidenced by from the improved rig count data issued by Baker Hughes Inc. .
The Hess stock has also shown price strength over the last three months. During the aforesaid period, shares of the company gained 9.4% compared with almost 8% improvement for the Zacks categorized Oil & Gas-U.S Integrated industry.
However, the company projected lesser year-over-year capital spending, which is likely to have resulted in lower production than 2015. To be precise, Hess reduced its 2016 capital expenditure by 48% to $2.1 billion from $4 billion spent in 2015. Therefore, production levels are also expected to have decreased and are estimated to range between 315 thousand barrels of oil equivalent per day (mboed) and 325 mboed.
Earnings Whispers
Our proven model does not conclusively show that Hess is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of $1.09. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hess carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are some companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat this quarter:
SM Energy Company (SM - Free Report) has an Earnings ESP of +11.91% and a Zacks Rank #3. The company is expected to release earnings results on Feb 28.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Hess Corporation (HES): What to Expect This Earnings Season?
Hess Corporation (HES - Free Report) , a global exploration and production (E&P) company that develops, produces, purchases, transports and sells crude oil and natural gas, is expected to report fourth-quarter 2016 earnings on Jan 25, before the market opens.
The company topped the Zacks Consensus Estimate in three of the last four quarters with an average earnings beat of 6.44% despite persistently weak oil and gas prices.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
Although oil prices remained weak in the first two months of the fourth quarter, the commodity price advanced after OPEC decided to cut production. On Nov 30, the cartel reached a historic accord to curb output in keeping with the need to recover from the weak pricing scenario. Notably, this is the first time since 2008 that OPEC signed a deal to cut oil production.
Soon after, non-OPEC players also jumped on the bandwagon to limit crude output. After the historic deal, crude started moving north and even crossed the psychological $50 per barrel mark. In fact, throughout December the commodity was sold above this level.
Overall, the last month of the fourth quarter was favorable for oil exploration and production (E&P) companies. These firms continued to gather on the oil patches in a bid to increase production. This is evidenced by from the improved rig count data issued by Baker Hughes Inc. .
The Hess stock has also shown price strength over the last three months. During the aforesaid period, shares of the company gained 9.4% compared with almost 8% improvement for the Zacks categorized Oil & Gas-U.S Integrated industry.
However, the company projected lesser year-over-year capital spending, which is likely to have resulted in lower production than 2015. To be precise, Hess reduced its 2016 capital expenditure by 48% to $2.1 billion from $4 billion spent in 2015. Therefore, production levels are also expected to have decreased and are estimated to range between 315 thousand barrels of oil equivalent per day (mboed) and 325 mboed.
Earnings Whispers
Our proven model does not conclusively show that Hess is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of $1.09. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hess carries a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
Conversely, the Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are some companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat this quarter:
Halliburton Company (HAL - Free Report) has an Earnings ESP of +50.00% and a Zacks Rank #1. The company is expected to release earnings results on Jan 23. You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company (SM - Free Report) has an Earnings ESP of +11.91% and a Zacks Rank #3. The company is expected to release earnings results on Feb 28.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>