First-quarter 2018 earnings cycle is in full swing, with reports from 154 S&P 500 members already on board. Per the latest Earnings Trends, total earnings for these companies are up 25.4% from the prior-year quarter on 10.3% higher revenues, with 80.5% companies delivering positive earnings surprises and 72.1% beating revenue estimates.
For the first-quarter of 2018, we expect Energy to eclipse all the 16 Zacks sectors, posting earnings growth of 58.6%. For the January-to-March quarter, we project earnings of $14 billion — the highest in the last four quarters.
Importantly, Energy will likely be among the major drivers behind the S&P 500’s year-over-year earnings growth. Excluding Energy, the index’s Q1 earnings growth will likely drop to 16.5% from 17.8%.
A favorable Q1 oil pricing scenario is expected to back Energy’s performance. Per the U.S. Energy Information Administration, the average West Texas Intermediate (WTI) crude price for the month of January, February and March was reported at $63.70 per barrel, $62.23 and $62.73, respectively. The average oil price never touched $60 in any of the months in the 2015-2017 period, thanks to the extension of OPEC’s production cut deal through 2018-end.
Stocks to Watch for Earnings
Oil giant ExxonMobil Corporation (XOM - Free Report) is expected to report first-quarter 2018 results on Apr 27, before the opening bell.
In the preceding quarter, the company delivered a negative earnings surprise of 17% on the back of lower throughput margins. ExxonMobil delivered an average negative earnings surprise of 1.7% in the last four quarters.
According to our quantitative model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase its odds of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Our proven model does not show that ExxonMobil is likely to beat estimates because it has an Earnings ESP of -4.38% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Phillips 66 (PSX - Free Report) is a leading refining player. In the last reported quarter, the company delivered earnings of $1.07 per share which surpassed the Zacks Consensus Estimate of 86 cents. The bottom line also increased from the year-ago quarter’s level of 16 cents.
The Houston, TX-based company’s earnings surprise history is impressive as it delivered an average positive earnings surprise of 450.1% over the last four quarters.
Our proven model shows that Phillip 66 is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of +2.86%. (Read more: Phillips 66 to Report Q1 Earnings: Is a Beat in Store?)
Chevron Corporation (CVX - Free Report) is a leading integrated energy player in the world. The company reported weaker-than-expected fourth-quarter 2017 earnings after excluding the impacts of U.S. tax reform. Adjusted earnings per share were 73 cents, missing the Zacks Consensus Estimate of $1.27.
The company’s earnings surprise history is impressive, wherein it delivered an average positive earnings surprise of 7.4% in the last four quarters.
Our proven model does not show that the company is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read More: Chevron to Report Q1 Earnings: What's in the Offing?)
An independent energy exploration company with producing properties mainly in the continental U.S., Cabot Oil & Gas Corp (COG - Free Report) , is expected to report first-quarter 2018 results, before the opening bell.
In the last reported quarter this upstream player’s earnings came above the Zacks Consensus Estimate by a penny. The upside can be attributed to higher production and realized prices.
The company beat estimates in two of the last four quarters and delivered an average positive earnings surprise of 1.98% in the last four quarters. However, our proven model does not show that Cabot will beat estimates in the upcoming quarterly results. The compnay has an Earnings ESP of -5.30%, while it carries a Zacks Rank #3.
Per the Zacks Consensus Estimate, the average crude oil and condensates realization (including hedges) is estimated at $56, up 1.8% from the preceding quarter.
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