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Why Is CONSOL Energy (CNX) Down 8.1% Since the Last Earnings Report?

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It has been more than a month since the last earnings report for CONSOL Energy Inc. (CNX - Free Report) . Shares have lost about 8.1% 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 the most recent earnings report in order to get a better handle on the important catalysts.

CONSOL Beats Q1 Earnings & Revenue Estimates, Guidance Up

Diversified fuel producer CONSOL Energy Inc. reported earnings of $0.17 per share in first-quarter 2017, beating the Zacks Consensus Estimate of $0.11 by 54.5%.

Revenue

CONSOL Energy’s total revenue of $698.7 million in the first quarter of 2017 surpassed the Zacks Consensus Estimate of $644 million by 8.5%.

Total revenue was also 31.3% higher than $532.8 million recorded in the year-ago period. The year-over-year increase was due to higher contribution from mining operations and its Exploration and Production (E&P) Division.

Segment Performance

Pennsylvania (PA) Mining Operations Division


Pennsylvania Operations sold 6.8 million tons of coal in the reported quarter compared with 5.3 million tons in the year-ago period.

Total cost of the coal sold was $34.52 per ton, higher than $33.16 in the year-ago quarter. The increase in cost was due to mobilization of additional resources for the development of longwall panels, demanding geological conditions at Enlow Fork mine and increased equipment maintenance.

Total sales price per ton was $46.80 compared with $42.99 in the prior-year quarter. Thanks to the improvement in sales price, average margin per ton sold in the reported quarter was $12.28 compared with $9.83 per ton in the year-ago quarter.

Exploration & Production (E&P) Division

CONSOL Energy registered a 3% year-over-year reduction in gas production volumes to 95 billion cubic feet equivalent (Bcfe) in first-quarter 2017.

The average sales price of $2.85 per thousand cubic feet gas equivalent (Mcfe), when combined with unit costs of $2.32 per Mcfe, resulted in a margin of $0.53 per Mcfe. This indicated an increase from the year-ago average sales price of $2.73 per Mcfe and unit costs of $2.41 per Mcfe, which led to a margin of $0.32 per Mcfe.

Financial Update

As of Mar 31, 2017, the company’s cash and cash equivalents were $61.3 million, up from $60.5 million as of Dec 31, 2016. Total long-term debts as of Mar 31, 2017 were $2.65 billion, down from $2.76 billion as of Dec 31, 2016.

Cash from operating activities in first-quarter 2017 was $205.1 million compared with $123.7 million in first-quarter 2016. Capital expenditure in the first quarter of 2017 was $112.9 million, up from the year-ago level of $77.7 million.

Guidance

CONSOL Energy has raised its 2017 E&P Division production to the range of 420–440 Bcfe, up from the previous expectation of 415 Bcfe.

CONSOL also raised its 2018 E&P Division production to a range of 490–520 Bcfe from the earlier guidance of 485 Bcfe.

However, despite a projected increase in production volumes, the E&P capital expenditures for 2017 and 2018 are expected to remain same at $555 million and $600 million respectively. The company expects total consolidated PA Mining Operations annual sales to be nearly 25.6–27.6 million tons for 2017, compared with the previous guidance of 26.0 million tons.

CONSOL Energy now expects total consolidated capital expenditures for PA Mining Operations to be $120–$136 million for 2017 compared with the previous guidance of $135 million.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 5.4% due to these changes.

CONSOL Energy Inc. Price and Consensus

VGM Scores

At this time, CONSOL Energy's stock has an average Growth Score of C, however its momentum is lagging a lot with an F. The stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is primarily suitable for value investors while also being suitable for those looking for growth.

Outlook

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.




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