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Can Range Resources (RRC) Spring a Surprise in Q2 Earnings?

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Upstream energy firm, Range Resources Corporation (RRC - Free Report) , is set to report second-quarter 2017 results on Aug 1, after the closing bell.

Last quarter, the company reported earnings of 69 cents per share that beat the Zacks Consensus Estimate of 18 cents. Notably, the company incurred a loss of 22 cents in the year-ago quarter. Let’s see how things are shaping up for this announcement.   

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 second-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 in this quarter as well as in the future.

Despite these positives, Range Resources’ shares have underperformed the industry in the last three months. During the aforesaid period, shares of the company have lost 16.2% compared with a decline of 7% for the broader industry.

Earnings Whispers

Our proven model does not conclusively show that Range Resources is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #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 the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Range Resources sports a Zacks Rank #1, which increases the predictive power of ESP. However, the company's 0.00% ESP makes surprise prediction difficult.

Conversely, 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 you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat this quarter.

Boardwalk Pipeline Partners LP has an Earnings ESP of +6.90% and carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

TransCanada Corporation (TRP - Free Report) has an Earnings ESP of +6.00% and sports a Zacks Rank #1.

The Williams Companies Inc (WMB - Free Report) has an Earnings ESP of +50.00% and carries a Zacks Rank #3.

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