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What's in Store for Range Resources (RRC) in Q3 Earnings?

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Upstream energy firm, Range Resources Corporation (RRC - Free Report) , is set to report third-quarter 2017 results on Oct 24, after the closing bell.

Last quarter, the company delivered earnings of 69 cents per share that beat the Zacks Consensus Estimate of 6 cents. Notably, the company incurred a loss of 14 cents in the year-ago quarter.

Let’s see how things are shaping up for this announcement.    

Which Way Are Estimates Treading?

Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company before earnings release.

The Zacks Consensus Estimate of 1 cent for the third quarter has been stable in the last 30 days. Notably, the company incurred a loss of 23 cents in the year-ago quarter.
 
Further, analysts polled by Zacks expect revenues of $525.95 million for the impending quarter, up 27.3% from the year-ago quarter.

Factors to Consider This Quarter

For the third quarter, Range Resources anticipates output at around 1,970 MMcfe per day, higher than 1,944.5 MMcfe/d recorded during second-quarter 2017. Also, the company projects fourth-quarter 2017 output at 2,170 MMcfe per day, representing 17% year-over-year improvement. Considering 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 third-quarter results.

Range Resources 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 third quarter. During the aforesaid period, shares of the company have ldeclined 15.5% as against the industry’s gain of 5.1%.

Since the beginning of 2012, total debt load at Range Resources has increased considerably. In fact, through all the four quarters of 2016, total debt load increased exponentially with no sign of a decline. This reflects weakness in the company’s balance sheet.

Earnings Whispers

Our proven model does not conclusively show that Range Resources will beat estimates this quarter. That is because a stock needs to have 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 pegged at -54.16%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Range Resources currently carries a Zacks Rank #3 (Hold).

Please note that the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.  

Other Stocks to Consider

Though earnings beat looks uncertain for Range Resources, 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:

Northern Oil and Gas, Inc (NOG - Free Report) , headquartered in Wayzata, Minnesota, is an exploration and production company. The company has an Earnings ESP of +33.33% and carries a Zacks Rank #2. You can the complete list of today’s Zacks #1 Rank stocks here.

Tesoro Corporation (ANDV - Free Report) , based in San Antonio, Texas, is involved in the refining and marketing of petroleum products. The company has an Earnings ESP of +13.05% and carries a Zacks Rank #3.

Gulfport Energy Corporation (GPOR - Free Report) owns and operates mature oil and gas properties in the Louisiana Gulf Coast area. The company has an Earnings ESP of +6.77% and holds a Zacks Rank #2.

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