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Diamondback Energy (FANG) Down 17.2% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Diamondback Energy, Inc. (FANG - Free Report) . Shares have lost about 17.2% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is FANG due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

First-Quarter 2018 Results

Diamondback reported strong first-quarter 2018 revenues and earnings primarily on the back of robust production growth. Higher oil price realizations also drove results.

The company reported adjusted net earnings per share of $1.64, beating the Zacks Consensus Estimate of $1.59. The bottom line also improved significantly from the prior-year quarter’s adjusted income of $1.04 per share.

Diamondback’s total operating revenues for the first quarter amounted to $480.2 million, which increased substantially from $235.2 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $443 million.

Notably, the company realized cash margins of more than 83% in the quarter under review, representing the highest level in Diamondback’s history.

Volume Analysis

Diamondback's average quarterly volume increased 66.5% year over year to 102.6 thousand barrels of oil equivalent per day (MBoe/d). Of the volume, 74% or 75.6 thousand barrels per day was oil.

Realized Prices

Average realized oil price jumped about 23.8% from the year-ago quarter to $61.66 per barrel, while average natural gas price realization decreased 14.9% to $2.29 per thousand cubic feet. Overall, the company fetched $47.05 per barrel compared with $41.63 a year ago.

Financial Position

During the quarter under review, the company spent $275 million on drilling/completion activities and $43 million on infrastructure/midstream activities. As of Mar 31, Diamondback had cash and cash equivalents of $72.5 million. Long-term debt of the company was $1,701.9 million,

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions higher for the current quarter compared to ten lower.

Diamondback Energy, Inc. Price and Consensus

VGM Scores

At this time, FANG has a great Growth Score of A, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, FANG has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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