Integrated energy player EQT Corporation (EQT - Free Report) is expected to report second-quarter 2017 earnings on Jul 27, before the market opens.
In the last quarter, the company saw a negative earnings surprise of 2.22%. However, EQT posted an average positive earnings surprise of 103.15% for the last four quarters. Let’s see how things are shaping up prior to the announcement.
Factors Likely to Affect Earnings
The commodity pricing scenario did not show improvement in the second quarter. Oil and gas prices have been low for almost three years now and the prices slipped further during second-quarter 2017. The prolonged weakness can be attributed to a persistent supply glut in the commodity market.
During the April-to-June quarter of this year, oil and natural gas prices fell 8.4% and 5%, respectively. Hence, the OPEC’s historical production cut extension deal until Mar 2018 has failed to drive oil. Natural gas is also an oversupplied commodity as is reflected by its inventory level of 2.816 tcf – as of Jun 23 – almost 7% higher than the five-year average mark (as per The U.S. Energy Information Administration).
However, as compared to the prior-year comparable quarter, both oil and gas prices have improved considerably.
On top of that, the company projects production sales volumes in the range of 190–195 Bcfe for second-quarter 2017, higher than 184.5 Bcfe produced during the April-to-June quarter of 2016.
Hence, though the pricing scenario of the commodities is not favorable for the upstream business if we consider the sequential comparison, the year-over-year comparison is positive in terms of production and price.
Also, the midstream business might rake in more profits for EQT given the fact that U.S. drillers continue to gather on shale plays. With the rise in production, demand for midstream assets for gathering and transmission activities is likely to scale higher.
Q2 Price Performance
During the April-to-June quarter of this year EQT Corp lost 4.1% as compared to the 16.9% fall of its industry.
Our proven model does not conclusively show an earnings beat for EQT this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP for the company is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: EQT carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the energy sector that, according to our model, have the right combination of elements to post an earnings beat this quarter:
Boardwalk Pipeline Partners LP (BWP - Free Report) has an Earnings ESP of +6.90% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TransCanada Corporation (TRP - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank #1.
C&J Energy Services Inc. (CJ - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #3.
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