On Apr 6, W&T Offshore, Inc. (WTI - Free Report) was raised to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The share price of W&T Offshore has skyrocketed over the past year, rallying 63.9% against the industry’s13.3% decline.
The Zacks Consensus Estimate for 2018 earnings per share has been revised upward from 16 cents to 58 cents over the last 60 days. We expect the company to post earnings growth of 3.6% in 2018. W&T Offshore is expected to witness year-over-year earnings growth of 37.9% in 2019, surpassing the S&P 500 index’s 9.4%.
In 2017, W&T Offshore generated positive free cashflow of $28 million against negative free cashflow of $33 million in 2016. A partial recovery in crude prices primarily supported the improvement. Hence, the company generated sufficient operating cashflow during 2017 for financing its capital budget.
The company’s cash balance surged 41% through 2017 while long-term debt declined 4.3% — marking three consecutive years of decline. This reflects the company’s balance sheet strength.
W&T Offshore has a strong earnings surprise history. The firm surpassed the Zacks Consensus Estimate in three of the past four quarters, the average positive earnings surprise being 542.8%. We appreciate the company’s solid cost-control initiatives. In 2017, the company managed to lower total expenses by nearly 50%.
The strong focus of the leading upstream energy player on oil-rich prospective resources in the Gulf of Mexico is highly appreciated. W&T Offshore’s operations spread over 710,000 gross acres, which will likely support production growth.
Other Stocks to Consider
Other prospective players in the energy space are Antero Resources Corp. (AR - Free Report) , Pioneer Natural Resources Co. (PXD - Free Report) and Concho Resources Inc. (CXO - Free Report) . All the stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Resources is expected to witness year-over-year earnings growth of 303%in 2018.
Pioneer Natural Resources has an average positive earnings surprise of 66.9% for the last four quarters.
Concho will likely see a year-over-year rise of 73.2% in 2018 earnings.
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