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Will Pioneer Natural (PXD) Disappoint this Earnings Season?

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Independent oil and gas exploration and production company, Pioneer Natural Resources Company (PXD - Free Report) , is scheduled to report second-quarter 2017 earnings on Aug 1, after the closing bell.

Last quarter, the company posted an average positive earnings surprise of 56.25%. Also, for the last four quarters, Pioneer Natural’s average positive surprise was 32.84%. Let’s see how things are shaping up prior to the announcement.

Factors Likely to Affect Earnings

As compared to the year-ago quarter, the pricing scenario for both crude and natural gas has improved considerably. This is a favorable development for Pioneer Natural as it has been able to sell the commodities at favorable prices. 

Also, for second-quarter 2017, Pioneer Natural expects production in the range of 254−259 MBOE/D, higher than 233 MBOE/D during the April-to-June quarter of 2016. Hence, higher projected output in the view of higher oil and natural gas could prove favorable for Pioneer Natural.

Also, reducing long-term debt over the entire of last year strengthened the company’s financials. However, the visible trend of declining cash balances during the first quarter of this year has dented the balanced sheet to some extent.

Price Performance

During the quarter, Pioneer Natural lost 14.3% as compared to the 16.9% decline of the industry.     

Earnings Whispers

Our proven model does not conclusively show that Pioneer Natural is likely to beat estimates this quarter as it does not have the right combination of two key ingredients. A stock needs to have both a positive Earnings ESPand 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 -16.67%. This is because the Most Accurate estimate stands at 10 cents while the Zacks Consensus Estimate is pegged at 12 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Pioneer Natural Resources currently has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) 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 has an Earnings ESP of +6.90% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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

C&J Energy Services Inc. (CJ - Free Report) has an Earnings ESP of +100.00% and a Zacks Rank #3.

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