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Denbury (DNR) to Post Q3 Earnings: What's in the Offing?

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Denbury Resources Inc. (DNR - Free Report) is set to release third-quarter 2018 results, before the opening bell on Nov 8.

The company beat the Zacks Consensus Estimate in all of the prior four quarters, the average positive earnings surprise being 162.9%. In the last reported quarter, this upstream energy player’s earnings of 13 cents beat the Zacks Consensus Estimate of 10 cents, thanks to the increased production of oil along with higher realized crude price.

Which Way is Estimates Headed?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts expect from the earnings release.

The Zacks Consensus Estimate for third-quarter earnings of 11 cents was unchanged over the last seven days. It reflects growth of 175% from the year-ago quarter.

Further, the consensus estimate for revenues stands at $357.2 million, showing 34% rise from the prior-year quarter.

Denbury Resources Inc. Price and EPS Surprise

 

Denbury Resources Inc. Price and EPS Surprise | Denbury Resources Inc. Quote

Factors to Consider

Denbury is among the leading oil explorers and producers, with presence the Gulf Coast and Rocky Mountain.

The Zacks Consensus Estimate for the company’s third-quarter 2018 daily production stands at 62 thousand barrels of oil equivalent (MBOE/D), higher than 60.3 MBOE/D in the year-ago quarter.

It is to be noted that the Zacks Consensus Estimate for the commodity’s daily oil output stands at 60 thousand barrels per day (MB/D), up from 58.4 MB/D in the prior-year quarter.

Moreover, the Zacks Consensus Estimate for oil price realization — including hedging — is pegged at $60 per barrel, significantly higher than $47.8 in the year-ago quarter.

Since the majority of the company’s production comprises crude, higher expected production of the commodity amid favorable oil pricing scenario should contribute to this upstream energy firm’s bottom line.

However, Denbury’s highly levered balance sheet is a matter of concern. The company’s total debt to capitalization ratio of 78.3% is significantly higher than 45.5% for the stocks belonging to the industry.

Earnings Whispers

Our proven model does not conclusively predict a beat for Denbury this earnings season. 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. That is not the case here as you will see below.

Earnings ESP: Earnings ESP of the company currently stands at -5.18%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Denbury currently carries a Zacks Rank #2. Though a favorable Zacks Rank increases the predictive power of ESP, the company’s earnings ESP of -5.18% makes surprise prediction difficult.

Meanwhile, we caution investors 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.

Stocks to Consider

Though an earnings beat looks uncertain for Denbury, here are a few firms that you may want to consider, which have the right combination of elements to post an earnings beat this quarter:

QEP Resources, Inc. (QEP - Free Report) has an Earnings ESP of +242.22% and a Zacks Rank #3. The company is slated to report third-quarter 2018 results on Nov 7.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Northern Oil and Gas, Inc. (NOG - Free Report) has an Earnings ESP of +6.52% and a Zacks Rank #2. The company is slated to report third-quarter results on Nov 8.

TC PipeLines, LP (TCP - Free Report) has an Earnings ESP of +13.29% and a Zacks Rank #1. The partnership is slated to report third-quarter 2018 results on Nov 9.

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