Back to top

Will Rising Oil Price Aid Anadarko (APC) in Q1 Earnings?

Read MoreHide Full Article

Anadarko Petroleum Corporation (APC - Free Report) is likely to beat earnings estimates in its first-quarter 2018 results on May 1. In the fourth quarter, the oil and gas company reported a positive earnings surprise of 500.0%.

Why a Likely Positive Surprise?

A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. Our model shows that Anadarko Petroleum is likely to beat on earnings in the soon-to-be-reported quarter as it possesses both the components.

Zacks ESP: The company’s Earnings ESP is +13.37% as the Most Accurate estimate is pegged at 45 cents, higher than the Zacks Consensus Estimate of 39 cents.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Anadarko Petroleum’s Zacks Rank #3, when combined with a positive Earnings ESP, increases the possibility of a beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors to Consider

Anadarko Petroleum has increased its focus on oil production and the same is expected to contribute in excess of 60% of its total revenues. The Zacks Consensus Estimate projects the price per barrel of crude oil and condensate to be $60, up from the fourth-quarter level of $56. The Zacks Consensus Estimate for Oil and Condensate daily volume is 361,000 barrels per day, reflecting a sequential increase of 1.7%. Both these factors are going to have a positive impact on first-quarter’s performance.

Anadarko Petroleum has completed more than 50% of its $3 billion share repurchase program, which will definitely increase the value of its existing shareholders. High oil production from Delaware, Denver-Julesburg Basin and the Gulf of Mexico are expected boost margins of the company due to the improvement of commodity prices.

The Zacks Consensus Estimate for first-quarter total average daily volumes is pegged at 631,000 barrels of oil equivalent per day (BOE/d), marginally lower than 637,000 BOE/d reported in fourth-quarter 2017.

The Zacks Consensus Estimate for first-quarter total revenues is pegged at $2,956 million, reflecting sequential growth of 0.9%.

Other Stocks to Consider

Apart from Anadarko Petroleum, here are some other companies from the industry that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +4.71% and a Zacks Rank #1. The company is expected to release first-quarter 2018 results on May 3.

Comstock Resources Inc. (CRK - Free Report) has an Earnings ESP of +51.83% and a Zacks Rank #2. The company is expected to release first-quarter 2018 results on May 14.

Evolution Petroleum Corporation (EPM - Free Report) has an Earnings ESP of +12.00% and a Zacks Rank #2. The company is expected to release third-quarter fiscal 2018 results on May 14.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>



More from Zacks Analyst Blog

You May Like