The Q2 earnings season has long crossed the half way mark, with results from 350 S&P 500 members that account for more than 79.3% of the index’s total market capitalization.
The Picture So Far
As per the latest Earnings Trends, total earnings for these companies rose 11% from the same period last year on 5.9% higher revenues, with 74% beating earnings and 68% trumping revenue estimates.
Energy Outshines Other Sectors
We have divided the S&P 500 Index into 16 Zacks Sectors. As per our report, among all the sectors, Oil/Energy has witnessed the highest year-over-year earnings growth. So far, 71% of Oil/Energy companies have reported with a combined picture of 224.4% earnings growth. The performance of other sectors is nowhere near what Oil/Energy has recorded.
On top of that, Oil/Energy is expected to outshine the rest in the remainder of Q2 with year-over-year earnings growth of 334.4%.
Research shows that during Q2, the Oil/Energy sector will likely generate quarterly earnings of $8.2 billion, much higher than $1.9 billion recorded during the April-to-June quarter of 2016. Overall, the sector has been showing a steady improvement in the bottom line since 2016.
Healthy Oil & Gas Performance in Q2
The oil and gas pricing scenario in second-quarter 2017 was much better than the year-ago comparable period.
Hopes of OPEC’s production cut deal extension was the prime factor driving the year-over-year hike in prices during April and almost the entire of May. Market anticipations proved somewhat correct as OPEC and 11 non-OPEC players, including Russia, decided to extend the production cut deal until Mar 2018 in the Vienna meeting.
Natural gas also made a modest recovery in Q2 after the commodity hit its lowest annual average price in 2016 in almost 20 years.
Energy Explorers & Midstream Players to Watch for Earnings
Let’s see what’s in store for three such companies expected to come up with second-quarter numbers on Aug 7. Let’s take a look at how things are shaping up at their end.
Upstream player RSP Permian Inc. (RSPP - Free Report) is expected to report results after the closing bell. In the first quarter of 2017, this Dallas, TX-based company delivered a positive earnings surprise of 14.29%.
Our proven model does not conclusively show an earnings beat for RSP Permian this quarter. That is because the stock has an Earnings ESP of +6.67% and a Zacks Rank #5 (Strong Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat on earnings.
Based in Houston, TX Plains GP Holdings LP (PAGP - Free Report) holds a non-economic controlling stake in the general partner of Plains All American Pipeline LP (PAA - Free Report) . In North America, Plains All American is among the leading midstream energy players with extensive energy infrastructure.
The company is scheduled to report results after the closing bell. Last quarter, Plains GP Holdings reported an earnings miss of 24.44%.
However, an earnings beat is certain for Plains GP Holdings this time as it has an Earnings ESP of +12.50% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Laredo Petroleum Inc. (LPI - Free Report) - headquartered in Tulsa, OK - is an upstream company with operation comprises exploitation and production of oil and natural gas resources in the prospective Permian Basin.
The company will likely report Q2 results after the closing bell. In the first quarter of 2017, Laredo reported a negative earnings surprise of 9.09%.
However, an earnings beat is certain for the explorer this time as it has an Earnings ESP of +9.09% and a Zacks Rank #3.
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