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Why Is Noble (NBL) Down 9.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Noble Energy (NBL - Free Report) . Shares have lost about 9.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Noble 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.

Noble Energy Q3 Earnings, Revenues Beat Estimates

Noble Energy, Inc. delivered adjusted earnings of 27 cents per share in third-quarter 2018, surpassing the Zacks Consensus Estimate of 16 cents by 68.8%.

On a GAAP basis, the company reported earnings of 47 cents per share versus the year-ago quarter’s loss of 28 cents.

Total Revenues

Noble Energy's total revenues surged around 32.6% year over year to $1,273 million in the third quarter. Also, the top line exceeded the Zacks Consensus Estimate of $1,152 million by 10.5%.

Improvement was driven by a higher sales volume, which increased 8% compared with the previous year’s tally. The volumes were up owing to higher volumes from Delaware and DJ Basin assets.

Operational Results

In the quarter under review, sales volume averaged 345 thousand barrels of oil equivalent per day (MBoe/d), which was at the upper end of the guided range.  U.S. onshore assets are a major contributor to the total sales volume, contributing nearly 72% in the third quarter.

Operating income was $498 million compared with $2 million in the year-ago period.

During the quarter under consideration, the company repurchased 3.4 million shares by deploying $103 million. The total year-to-date repurchase stood at 7.4 million shares at the cost of $233 million or 31.1% of the authorized $750 million share repurchase program.

Realized Prices

U.S. onshore realized crude oil and condensate prices in the reported quarter surged 41.3% to $65.54 per barrel from the year-ago level of $46.39.

U.S. onshore natural gas prices decreased 22.7% to $2.31 per thousand cubic feet from $2.99 in the year-ago period.

U.S. onshore realized prices for natural gas liquids were up 24.8% to $28.58 per barrel.

Financial Highlights

Noble Energy's cash and cash equivalents as of Sep 30, 2018 were $720 million, up from $675 million on Dec 31, 2017.

Long-term debt was $6,571 million as of Sep 30, 2018 compared with $6,746 million on Dec 31, 2017.

Cash flow from operating activities in the quarter was $697 million, up from $541 million in the prior-year quarter.

Guidance

Noble Energy reaffirms its 2018 sales volume at the lower end of the guided range of 350-360 MBoe/d due to deferred completion activity in the Delaware and Eagle Ford declines. The company raised its fourth-quarter sales volumes to the range of 337-349 MBoe/d.

Noble Energy reiterates its 2018 capital expenditure of $3 billion while the fourth-quarter capex is anticipated at $625-$700 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -26.58% due to these changes.

VGM Scores

Currently, Noble has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, 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 these revisions indicates a downward shift. Notably, Noble has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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