Upstream energy firm, Range Resources Corporation (RRC - Free Report) , is set to report fourth-quarter 2017 results on Feb 27, after the closing bell.
Last quarter, the company delivered a positive earnings surprise of 150%. Range Resources also managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 74.3%.
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 15 cents for the fourth quarter has remained unchanged for the last seven days. This represents a year-over-year earnings plunge of 34.8%.
Further, analysts polled by Zacks expect revenues of $643 million for the impending quarter, up 153.7% from the year-ago quarter.
Factors to Consider This Quarter
The Zacks Consensus Estimate for the company’s total fourth-quarter production is pegged at 2,175 million cubic feet equivalent per day (MMcfe/d) — almost in line with the company’s projection of 2,170 MMcfe/d, up from 1,986 MMcfe/d reported in the prior quarter and 1,854 MMcfe/d in the year-ago quarter.
The Zacks Consensus Estimate for the company’s natural gas price realizations — including hedging — is pegged at $2.83 per Mcf, up from $2.69 per Mcf in the third quarter but down from $2.93 recorded in the October to December quarter of 2016.
Higher expected average daily production and favorable sequential natural gas price realizations might contribute to the company’s earnings.
However, the upstream firm’s long-term debt increased 42.3% through 2016 and 5.5% during the first nine months of 2017. Although increasing debt load is a concern, the company’s debt to capitalization ratio came lower than the industry. Total debt to capitalization ratio of the company is 41.8%, lower than the industry’s 49.4%.
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 -2.90%. 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).Although a favorable Zacks rank increases the predictive power of ESP, we need to have a positive ESP to be confident of an earnings beat.
Please note that the Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
Stocks to Consider
Here are a couple of companies which, per our model, have the right combination of elements to post an earnings beat this quarter:
Houston, TX-based EOG Resources (EOG - Free Report) is an upstream company. It has an Earnings ESP of +3.61% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
WildHorse Resource Development Corporation (WRD - Free Report) , based in Houston, TX, is also an upstream energy firm. It has an Earnings ESP of + 5.26% and flaunts a Zacks Rank of 1.
Dallas, TX-based RSP Permian, Inc. is an upstream energy company with an Earnings ESP of + 1.47%. It is a Zacks #3 Ranked player.
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