EOG Resources, Inc. (EOG - Free Report) is expected to release second-quarter 2018 results on Aug 3.
In the last reported quarter, the upstream energy company’s earnings of $1.19 per share beat the Zacks Consensus Estimate of $1.01. The company surpassed estimates thrice in the trailing four quarters, delivering a positive earnings surprise of 30.1%.
Let’s see how things are shaping up for this announcement.
Which Way are Estimates Trending?
Let’s have a look at the estimate revision trend to get a clear picture of what analysts are thinking about the company before earnings release.
The Zacks Consensus Estimate of $1.25 for the second quarter has seen four upward and five downward revisions by firms in the past 30 days. It compares favorably with the year-ago quarter’s EPS of 8 cents.
Further, the Zacks Consensus Estimate for second-quarter revenues is pegged at $3.9 billion, reflecting an improvement of 49.8% from the year-ago quarter.
Factors at Play
The Zacks Consensus Estimate for total Crude Oil and Condensate Volumes is pegged at 384 thousand barrels per day (MBbl/d), within the company’s projected range of 374.4-388.6 MBbl/d but higher than the year-ago quarter’s 335 MBbl/d. The Zacks Consensus Estimate for Average Crude Oil and Condensate Prices (Composite) is $63 per barrel, above the year-ago quarter’s $47.46 a barrel.
The Zacks Consensus Estimate for total Natural Gas Liquids Volumes is 105 MBbl/d, higher than the year-ago quarter’s 87 MBbl/d. The Zacks Consensus Estimate for Average Natural Gas Liquids Prices (Composite) is $23 per barrel, higher than the year-ago quarter’s $18.65 a barrel but lower than the last reported quarter’s $24.46 per barrel.
The Zacks Consensus Estimate for Average Natural Gas Prices (Composite) is $2.35 per thousand cubic feet (Mcf), higher than the year-ago quarter’s $2.25 per Mcf but lower than $2.83 per Mcf recorded in the first quarter.
Moreover, the Zacks Consensus Estimate for total production is 63 million barrels of oil equivalent (MMBoe), higher than the year-ago quarter’s 55 MMBoe.
However, operating costs are a concern for the company. In the last reported quarter, the same increased more than 12% year over year. For the second quarter, Gathering and Processing Costs are expected to surge from the year-ago quarter.
While rising volumes and product prices are expected to benefit second-quarter results of the company, operating costs can offset the upside.
What Does the Zacks Model Unveil?
Our proven model does not show that EOG Resources is likely to beat the Zacks Consensus Estimate in the to-be-reported quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Earnings ESP: Earnings ESP represent the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. EOG Resources has an ESP of -0.60% as the Most Accurate Estimate stands at $1.24 while the Zacks Consensus Estimate is pegged at $1.25. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, EOG Resources carries a Zacks Rank #3. Though a Zacks Rank of #3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Energy Stocks With Favorable Combination
Here are some companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
Calgary, Canada-based Canadian Natural Resources Limited (CNQ - Free Report) sports a Zacks Rank #1 and has an Earnings ESP of +1.75%. The company is scheduled to report second-quarter earnings on Aug 2.
Plano, TX-based Denbury Resources Inc. (DNR - Free Report) has a Zacks Rank #2 and an Earnings ESP of +27.78%. The company will report second-quarter earnings on Aug 8.
Dallas, TX-based Holly Energy Partners, L.P. (HEP - Free Report) carries a Zacks Rank #2 and has an Earnings ESP of +1.82%. The company is anticipated to report quarterly results on Aug 1.
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