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Range Resources (RRC) Q1 Earnings: Is a Beat in the Cards?

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Upstream energy firm Range Resources Corporation (RRC - Free Report) is set to report first-quarter 2017 results on Apr 24, after the closing bell.

Last quarter, the company reported earnings of 23 cents per share that beat the Zacks Consensus Estimate of 10 cents. The quarterly earnings, however, decreased from year-earlier quarter earnings of 25 cents per share.

Factors to Consider this Quarter

For 2017, the company has set its production guidance at 2.07 Bcfe per day, which translates to annual growth rate of 33–35%. Given the recovery of natural gas prices from the multiyear low levels, we expect the company to be able to sell the increased output at higher prices. This, in turn, should boost the company’s first-quarter results.

The company also projects capital spending of $1.15 billion for 2017. The raised guidance was issued after two consecutive years of capital budget reduction. The company believes that higher activity along with more spending should support significant production growth this quarter as well as in the future.

Despite these positives, Range Resources shares underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry in the last three months. Over the aforesaid period, shares of the company lost 19.9% compared with a decrease of 12.4% for the broader industry.

Earnings Whispers

Our proven model shows that Range Resources is likely to beat on earnings this time because it has the right combination of two key ingredients.  

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +47.06%. This is because the Most Accurate estimate stands at 25 cents, while the Zacks Consensus Estimate is pegged at 17 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Range Resources carries a Zacks Rank #3. Note that stocks with Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) have a significantly higher chance of beating on earnings. The combination of Range Resources’ favorable Zacks Rank and a positive Earnings ESP makes us confident about an earnings beat.

Conversely, the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.  

Stocks to Consider

Here are some firms that have the right combination of elements to post an earnings beat this quarter:

Antero Resources Corporation (AR - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #1. The company is expected to release earnings on Apr 26. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chesapeake Energy Corp. (CHK - Free Report) has an Earnings ESP of +31.58% and a Zacks Rank #3. The company is expected to release earnings on May 4.

Southwestern Energy Company (SWN - Free Report) has an Earnings ESP of +11.77% and a Zacks Rank #3. The company is expected to release earnings on Apr 27.

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