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ConocoPhillips' Q2 Earnings on Deck: Remain Invested in the Stock?
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Key Takeaways
COP is expected to post Q2 earnings of $1.36 per share on revenues of $14.9B, up 5.6% year over year.
Production volumes are forecast to rise 21% year over year, led by 27.8% growth in the Lower 48 region.
COP remains undervalued with an EV/EBITDA of 5.18, below the industry average of 10.83.
ConocoPhillips (COP - Free Report) is set to report second-quarter 2025 results on Aug. 7, before the opening bell.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.36 per share, implying a decline of 31.3% from the year-ago reported number. Three analysts have revised their estimates upward in the past 30 days. The Zacks Consensus Estimate for quarterly revenues is currently pinned at $14.9 billion, indicating a 5.6% increase from the year-ago actuals.
Image Source: Zacks Investment Research
COP beat the consensus estimate for earnings in three of the trailing four quarters and missed the same once, with the average surprise being 1.94%.
Q2 Earnings Whispers
Our proven model doesn't predict an earnings beat for COP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping Q2 Results
According to the U.S. Energy Information Administration (“EIA”), the average spot prices for Cushing, OK, West Texas Intermediate (WTI) crude for April, May and June were $63.54, $62.17, and $68.17 per barrel, respectively. Based on the EIA data, the pricing environment was healthier in the first quarter, with average prices of $75.74, $71.53 and $68.24 per barrel for January, February and March, respectively. The same story also applies to natural gas prices.
Our model forecasts a 21% year-over-year increase in the company’s total daily oil equivalent production volumes. In the prolific Lower 48 region, which significantly contributes to COP’s production, daily oil equivalent volumes are expected to rise 27.8% year over year, according to our model. Notably, the Lower 48 represents the company’s high-quality unconventional resources in the United States.
Price Performance & Valuation
COP's stock has lost 8.4% over the past year compared with the decline of 12.3% of the industry’s composite stocks.
One-Year Price Chart
Image Source: Zacks Investment Research
Although COP declined less than the industry, it still appears relatively undervalued. The company's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio is 5.18, which is trading at a discount compared to the industry average of 10.83.
Image Source: Zacks Investment Research
COP’s Investment Thesis
ConocoPhillips has extensive oil and natural gas resources that it can develop, earning substantial profits, even if the price of oil declines. The upstream player had claimed on its first-quarter earnings call that it had identified sufficient oil and gas resources that could be developed and produced for decades, which would be highly economical.
The leading upstream player is confident that it will conduct the extraction, development and delivery of the oil to the market profitably even if the price of West Texas Intermediate oil falls to as low as $40 per barrel. Thus, ConocoPhillips has a significant competitive advantage, especially when the pricing environment of oil becomes challenging. Like COP, Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) can also conduct low-cost operations due to their presence in prolific shale resources. However, ConocoPhillips' global footprint exposes it to high-tax regions like Norway and Libya, which may weigh on net earnings. Also, ConocoPhillips is spending heavily on big projects like Willow and LNG that may boost profits later, but for now, they’re tying up cash and limiting how much the company can return to investors.
How the Diversified Energy Majors XOM, CVX Fared in Q2
Chevron reported adjusted second-quarter earnings per share of $1.77, beating the Zacks Consensus Estimate of $1.70. The outperformance stemmed from higher-than-expected production in the company’s key upstream segment.
However, the bottom line came well below the year-ago adjusted profit of $2.55 due to weaker oil price realizations.
CVX generated revenue of $44.8 billion. The sales figure missed the Zacks Consensus Estimate of $47.1 billion and decreased 12.4% year over year.
Coming to XOM’s story, the large integrated player reported earnings per share of $1.64 (excluding identified items), which beat the Zacks Consensus Estimate of $1.49. The bottom line declined from the year-ago level of $2.14.
ExxonMobil’s total quarterly revenues of $81.5 billion missed the Zacks Consensus Estimate of $82.8 billion. The top line declined from the year-ago figure of $93.06 billion.
Last Word
While COP offers promising long-term potential and appealing valuations, investors should not rush to buy the stock. However, those already holding the stock are advised to maintain their position.
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ConocoPhillips' Q2 Earnings on Deck: Remain Invested in the Stock?
Key Takeaways
ConocoPhillips (COP - Free Report) is set to report second-quarter 2025 results on Aug. 7, before the opening bell.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.36 per share, implying a decline of 31.3% from the year-ago reported number. Three analysts have revised their estimates upward in the past 30 days. The Zacks Consensus Estimate for quarterly revenues is currently pinned at $14.9 billion, indicating a 5.6% increase from the year-ago actuals.
COP beat the consensus estimate for earnings in three of the trailing four quarters and missed the same once, with the average surprise being 1.94%.
Q2 Earnings Whispers
Our proven model doesn't predict an earnings beat for COP this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here.
The leading upstream energy player has an Earnings ESP of 0.00%. COP currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping Q2 Results
According to the U.S. Energy Information Administration (“EIA”), the average spot prices for Cushing, OK, West Texas Intermediate (WTI) crude for April, May and June were $63.54, $62.17, and $68.17 per barrel, respectively. Based on the EIA data, the pricing environment was healthier in the first quarter, with average prices of $75.74, $71.53 and $68.24 per barrel for January, February and March, respectively. The same story also applies to natural gas prices.
Our model forecasts a 21% year-over-year increase in the company’s total daily oil equivalent production volumes. In the prolific Lower 48 region, which significantly contributes to COP’s production, daily oil equivalent volumes are expected to rise 27.8% year over year, according to our model. Notably, the Lower 48 represents the company’s high-quality unconventional resources in the United States.
Price Performance & Valuation
COP's stock has lost 8.4% over the past year compared with the decline of 12.3% of the industry’s composite stocks.
One-Year Price Chart
Although COP declined less than the industry, it still appears relatively undervalued. The company's current trailing 12-month enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) ratio is 5.18, which is trading at a discount compared to the industry average of 10.83.
COP’s Investment Thesis
ConocoPhillips has extensive oil and natural gas resources that it can develop, earning substantial profits, even if the price of oil declines. The upstream player had claimed on its first-quarter earnings call that it had identified sufficient oil and gas resources that could be developed and produced for decades, which would be highly economical.
The leading upstream player is confident that it will conduct the extraction, development and delivery of the oil to the market profitably even if the price of West Texas Intermediate oil falls to as low as $40 per barrel. Thus, ConocoPhillips has a significant competitive advantage, especially when the pricing environment of oil becomes challenging. Like COP, Exxon Mobil Corporation (XOM - Free Report) and Chevron Corporation (CVX - Free Report) can also conduct low-cost operations due to their presence in prolific shale resources. However, ConocoPhillips' global footprint exposes it to high-tax regions like Norway and Libya, which may weigh on net earnings. Also, ConocoPhillips is spending heavily on big projects like Willow and LNG that may boost profits later, but for now, they’re tying up cash and limiting how much the company can return to investors.
How the Diversified Energy Majors XOM, CVX Fared in Q2
Chevron reported adjusted second-quarter earnings per share of $1.77, beating the Zacks Consensus Estimate of $1.70. The outperformance stemmed from higher-than-expected production in the company’s key upstream segment.
However, the bottom line came well below the year-ago adjusted profit of $2.55 due to weaker oil price realizations.
CVX generated revenue of $44.8 billion. The sales figure missed the Zacks Consensus Estimate of $47.1 billion and decreased 12.4% year over year.
Coming to XOM’s story, the large integrated player reported earnings per share of $1.64 (excluding identified items), which beat the Zacks Consensus Estimate of $1.49. The bottom line declined from the year-ago level of $2.14.
ExxonMobil’s total quarterly revenues of $81.5 billion missed the Zacks Consensus Estimate of $82.8 billion. The top line declined from the year-ago figure of $93.06 billion.
Last Word
While COP offers promising long-term potential and appealing valuations, investors should not rush to buy the stock. However, those already holding the stock are advised to maintain their position.