About a month has gone by since the last earnings report for Noble Energy Inc. (NBL - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Noble Energy Q2 Earnings Beat Estimates, Revenues Lag
Noble Energy reported adjusted earnings of 5 cents per share for the second quarter of 2017, beating the Zacks Consensus Estimate of a loss of 13 cents.
On a GAAP basis, the company reported a loss of $3.20 per share against a loss of 73 cents in the year-ago quarter.
The difference between adjusted and GAAP figures was due to the combined effect of a loss on divestiture, acquisition expenses, other charges, offset by a gain from tax adjustment.
Noble Energy's total revenue increased around 25.1% year over year to $1,059 million in the second quarter. However, reported revenues marginally lagged the Zacks Consensus Estimate of $1,065 million by 0.6%.
In the quarter under review, sales volumes averaged 408 thousand barrels of oil equivalent per day (MBoe/d), reflecting a 7.0% sequential growth. The sales volumes were within the guided range of 405–415 MBoe/d.
Operating expenses in the reported quarter was $3,359 million compared with $1,109 million in the year-ago quarter. However, excluding the loss on Marcellus Shale upstream divestiture, operating expenses were down 6.5% year over year.
Interest expenses in the quarter were $96 million, up 23.1%.
U.S. Onshore Realized crude oil and condensate prices in the quarter increased 13.9% to $45.63 per barrel from the year-ago level of $40.06.
U.S. Onshore Natural gas prices increased 82.3% to $3.19 per thousand cubic feet (Mcf) from $1.75 in the year-ago period.
U.S. Onshore Realized prices for natural gas liquids were up 33.9% to $18.77 per barrel.
Noble Energy's cash and cash equivalents as of Jun 30, 2017 were $540 million, down from $1,180 million as of Dec 31, 2016.
Long-term debt was $7,133 million as of Jun 30, 2017 compared with $7,011 million as of Dec 31, 2016.
Cash flow from operating activities in the quarter was $341 million, up from $189 million last year.
For the third and fourth quarter of 2017, Noble Energy expects total sales volumes in the range of 340–350 MBoe/d and 380–390 MBoe/d, respectively.
For 2017, Noble Energy reiterated organic capital expenditure in the range of $2,300–$2,600 million.
Excluding nearly 75 MBoe/d of full-year 2017 volumes related to the Marcellus and other asset divestments, Noble Energy’s original annual volume guidance was 340–350 MBoe/d.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to seven lower. While looking back an additional 30 days, we can see even more downside. In the past month, the consensus estimate has shifted lower by 67.2% due to these changes.
At this time, Noble Energy's stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.