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6 Reasons to Invest in Denbury Resources (DNR) Stock Now
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Denbury Resources Inc. looks compelling at the moment. Given the company’s strong fundamentals as well as positive estimate revisions, it seems like this is the right time to add the stock to your portfolio.
It is a growing exploration and production (E&P) company engaged in the acquisition, development, operation, and exploration of oil and natural gas properties in the Gulf Coast and Rocky Mountain regions of the United States. Moreover, the company has ample liquidity and no near-term maturities. Notably, It currently has a Zacks Rank #2 (Buy), which means the company is poised to outperform the market.
What Makes the Stock a Solid Bet?
Low-Risk Business:
Denbury is one of the leading oil producers in Mississippi, with properties in Louisiana, Alabama and Southeast Texas as well. The company has a relatively low-risk business model as it produces oil by applying tertiary recovery techniques to mature fields. Moreover, with its in-house CO2 reserve base, Denbury has a significant competitive advantage in acquiring and exploiting mature oil reservoirs.
Oilier Production:
At the end of 2017, Denbury’s total proved reserves were 260 million barrels of oil equivalent (MMBOE), of which 97% was oil. The figure was higher than that of 2016. Moreover, during the second quarter, its total production averaged 61,994 barrels of oil equivalent per day (Boe/d), with approximately 97% oil. The ‘oilier’ nature of Denbury’s volume mix positions it to benefit from strengthening oil prices, which has come a long way from the historical lows – below $30 per barrel – in 2016. Notably, oil price is hovering above the $65 per barrel level for the last few months now.
Bottom-Line Prospects:
Denbury reported second-quarter 2018 earnings of 13 cents (excluding one-time items), beating the Zacks Consensus Estimate of 10 cents and also improving from breakeven results in the year-ago quarter. In the each of the last four reported quarters, the company beat the Zacks Consensus Estimate and delivered an average positive earnings surprise of 162.9%.
We believe the positive trend will continue in the coming quarters as well. Over the past 30 days, two analysts have upwardly revised earnings estimates for the third quarter of 2018, while none have decreased the same for Denbury. The Zacks Consensus Estimate for the current quarter has been revised upward from 8 cents per share to 10 cents, which is 150% higher than year-ago quarter’s figure of 4 cents. Moreover, for the whole year 2018, the bottom line is expected to surge 235.7% to 47 cents.
Operating Cash Flow to Surge:
Denbury plans to grow its business with the help of its cash flow. In the trailing 12 months, the company recorded net operating cash flow of $436 million. Denbury expects its net cash flow from operations for 2018 to be in the range of $430 – $480 million, conservatively assuming oil prices at $55 per barrel.
Impressive Industry Outlook:
The industry, to which Denbury belongs, currently has a Zacks Industry Rank of 116 out of 256 (top 45%). Studies have shown that 50% of a stock's price movement is directly tied to the performance of the industry group that it belongs to. In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking industry performance into account becomes a necessary measure.
Price Performance:
Denbury has surged 441.9% in the past year, widely outperforming the 24.9% collective growth of the stocks belonging to the industry.
Other Stocks to Consider
Investors interested in the energy sector can also opt for other top-ranked stocks like McDermott International, Inc. , Subsea 7 S.A. (SUBCY - Free Report) and Canadian Natural Resources Limited (CNQ - Free Report) . While McDermott and Subsea sport a Zacks Rank #1 (Strong Buy), Canadian Natural carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based McDermott is an equipment provider for energy companies. The company’s top line for 2018 is likely to improve 145% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 101.7%.
Luxembourg-based Subsea is an oilfield service providing company. In the last four reported quarters, the company delivered an average positive earnings surprise of 318.6%.
Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 41.3% year over year, while its bottom line is expected to increase more than 200%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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6 Reasons to Invest in Denbury Resources (DNR) Stock Now
Denbury Resources Inc. looks compelling at the moment. Given the company’s strong fundamentals as well as positive estimate revisions, it seems like this is the right time to add the stock to your portfolio.
It is a growing exploration and production (E&P) company engaged in the acquisition, development, operation, and exploration of oil and natural gas properties in the Gulf Coast and Rocky Mountain regions of the United States. Moreover, the company has ample liquidity and no near-term maturities. Notably, It currently has a Zacks Rank #2 (Buy), which means the company is poised to outperform the market.
What Makes the Stock a Solid Bet?
Low-Risk Business:
Denbury is one of the leading oil producers in Mississippi, with properties in Louisiana, Alabama and Southeast Texas as well. The company has a relatively low-risk business model as it produces oil by applying tertiary recovery techniques to mature fields. Moreover, with its in-house CO2 reserve base, Denbury has a significant competitive advantage in acquiring and exploiting mature oil reservoirs.
Oilier Production:
At the end of 2017, Denbury’s total proved reserves were 260 million barrels of oil equivalent (MMBOE), of which 97% was oil. The figure was higher than that of 2016. Moreover, during the second quarter, its total production averaged 61,994 barrels of oil equivalent per day (Boe/d), with approximately 97% oil. The ‘oilier’ nature of Denbury’s volume mix positions it to benefit from strengthening oil prices, which has come a long way from the historical lows – below $30 per barrel – in 2016. Notably, oil price is hovering above the $65 per barrel level for the last few months now.
Bottom-Line Prospects:
Denbury reported second-quarter 2018 earnings of 13 cents (excluding one-time items), beating the Zacks Consensus Estimate of 10 cents and also improving from breakeven results in the year-ago quarter. In the each of the last four reported quarters, the company beat the Zacks Consensus Estimate and delivered an average positive earnings surprise of 162.9%.
Denbury Resources Inc. Price and EPS Surprise
Denbury Resources Inc. Price and EPS Surprise | Denbury Resources Inc. Quote
Positive Earnings Estimate Revisions
We believe the positive trend will continue in the coming quarters as well. Over the past 30 days, two analysts have upwardly revised earnings estimates for the third quarter of 2018, while none have decreased the same for Denbury. The Zacks Consensus Estimate for the current quarter has been revised upward from 8 cents per share to 10 cents, which is 150% higher than year-ago quarter’s figure of 4 cents. Moreover, for the whole year 2018, the bottom line is expected to surge 235.7% to 47 cents.
Operating Cash Flow to Surge:
Denbury plans to grow its business with the help of its cash flow. In the trailing 12 months, the company recorded net operating cash flow of $436 million. Denbury expects its net cash flow from operations for 2018 to be in the range of $430 – $480 million, conservatively assuming oil prices at $55 per barrel.
Impressive Industry Outlook:
The industry, to which Denbury belongs, currently has a Zacks Industry Rank of 116 out of 256 (top 45%). Studies have shown that 50% of a stock's price movement is directly tied to the performance of the industry group that it belongs to. In fact, an average stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking industry performance into account becomes a necessary measure.
Price Performance:
Denbury has surged 441.9% in the past year, widely outperforming the 24.9% collective growth of the stocks belonging to the industry.
Other Stocks to Consider
Investors interested in the energy sector can also opt for other top-ranked stocks like McDermott International, Inc. , Subsea 7 S.A. (SUBCY - Free Report) and Canadian Natural Resources Limited (CNQ - Free Report) . While McDermott and Subsea sport a Zacks Rank #1 (Strong Buy), Canadian Natural carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based McDermott is an equipment provider for energy companies. The company’s top line for 2018 is likely to improve 145% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 101.7%.
Luxembourg-based Subsea is an oilfield service providing company. In the last four reported quarters, the company delivered an average positive earnings surprise of 318.6%.
Calgary, Canada-based Canadian Natural Resources is an upstream energy company. The company’s top line for 2018 is anticipated to improve 41.3% year over year, while its bottom line is expected to increase more than 200%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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