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Cimarex (XEC) Down 13.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Cimarex Energy (XEC - Free Report) . Shares have lost about 13.2% in that time frame, underperforming the S&P 500.

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

Cimarex Energy Q3 Earnings Beat Estimates, Rise Y/Y

Cimarex Energyreported third-quarter 2018 earnings of $1.99 per share, which surpassed the Zacks Consensus Estimate of $1.52 and the year-ago figure of $1.09.  

Total revenues of $591.5 million exceeded the Zacks Consensus Estimate of $556 million. The reported figure also came ahead of $464 million registered in third-quarter 2017.

The strong third quarter results were aided by increase in oil equivalent production and higher liquids price realizations.

Operational Highlights

In the quarter under review, total production averaged 218.6 thousand barrels of oil equivalent (MBOE) per day, up 14.7% year over year. Oil volumes rose 12.7% to 63.9 thousand barrels per day (MBbls/d) on a year-over-year basis, and marginally outpaced the Zacks Consensus Estimate of 63 MBbls/d.

Natural gas volumes increased 8.3% to 558.8 MMcf/d year over year and trumped the Zacks Consensus Estimate of 547 MMcf/d. Natural gas liquids (NGL) volumes jumped 28.7% year over year to 61.6 MBbls/d and came ahead of the Zacks Consensus Estimate of 58 MBbls/d.

While realized prices for natural gas declined 30.6% to $1.84 per thousand cubic feet, the same for crude oil and NGL increased 31.3% and 18.9% year over year to $58.25 per barrel and $25.72 per barrel, respectively.         

Through the July to September period, this upstream energy player brought on stream 115 gross wells.  

Financial Condition

As of Sep 30, the company had cash and cash equivalents of $863.9 million. Net long-term debt was roughly $1.5 billion, which represents a debt-to-capitalization ratio of almost 33%.   

Cimarex Energy's cash from operating activities, adjusted, totaled $388.7 million, up from $283.9 million in the prior-year quarter. The company spent $500.7 million on exploration and development during the third quarter.  

Guidance

Cimarex Energy projects total daily production for the December quarter of 2018 in the range of 238-247 MBoE. Of which, oil production is likely to be in the band of 73-78 MBbls/d. Daily production for 2018 is estimated in the range of 213-216 MBoE.

For 2018, the company reiterated capital spending between $1.6 billion and $1.7 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Cimarex has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions indicates a downward shift. It comes with little surprise Cimarex has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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