Back to top

Image: Bigstock

Why Is National Fuel Gas (NFG) Down 2.1% Since Last Earnings Report?

Read MoreHide Full Article

A month has gone by since the last earnings report for National Fuel Gas (NFG - Free Report) . Shares have lost about 2.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is National Fuel Gas 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 catalysts.

National Fuel Gas Q4 Earnings Lag Estimates, View Up

National Fuel Gas Company posted fourth-quarter fiscal 2018 operating earnings of 49 cents per share, lagging the Zacks Consensus Estimate of 54 cents by 9.3%. Also, the bottom line declined 7.5% from the year-ago figure of 53 cents.

Total Revenues

Total revenues of $289 million lagged the Zacks Consensus Estimate of $317 million by 8.8%. However, the top line increased 0.7% from the prior-year quarter’s revenues of $287 million.

Utility and Energy Marketing revenues jumped 0.8% to $93.24 million, Pipeline and Storage and Gathering revenues inched up 3% to $51.9 million, while Exploration and Production and Other Revenues fell 0.1% to $143.9 million.

Highlights of the Release

Total operating expenses in the reported quarter increased 4.6% to $208.6 million from the year-ago quarter, due to rise in operating and maintenance expenses, and purchased gas prices.

Total gas production in the reported quarter was 43,749 million cubic feet (MMcf), up from the year-ago quarter figure of 36,325 MMcf, primarily due to higher production from the Appalachia region.

Operating income in the reported quarter was down 7.8% year over year to $80.6 million.

The company incurred interest expenses of $28.5 million, down 2.7% from the year-ago period.

Seneca’s total proved natural gas and crude oil reserves on Sep 30, 2018 increased 369 billion cubic feet equivalent (Bcfe) or 17% to 2,523 Bcfe from 2,154 Bcfe on Sep 30, 2017.

Financial Highlights

On Sep 30, 2018, National Fuel Gas had cash and cash equivalents of $229.6 million compared with $555.5 million on Sep 30, 2017.

Long-term debt (excluding current maturities) was $2,131.4 million as of Sep 30, 2018 compared with the Sep 30, 2017 level of $2,083.7 million.

The company’s cash flow from operating activities in fiscal 2018 was $613.6 million, down from $684.2 million recorded in fiscal 2017.

Guidance

National Fuel Gas revised its fiscal 2019 earnings per share guidance upward. It now expects earnings in the range of $3.35-$3.65 up from the prior guidance of $3.30-$3.60 per share.

The revision in earnings guidance was primarily due to higher expected price realizations on Seneca’s production and lower projected operating expenses at the Utility and Pipeline and Storage segments.

National Fuel Gas reiterated its fiscal 2019 production in the range of 210-230 Bcfe, reflecting a 24% increase from fiscal 2018 production at the midpoint of the range.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, National Fuel Gas has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


National Fuel Gas Company (NFG) - free report >>

Published in