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Hess (HES) to Report Q1 Earnings: What's in the Offing?

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Hess Corporation (HES - Free Report) is set to release first-quarter 2019 results on Apr 25. New York, NY-based Hess is a global integrated energy company. It engages in exploration and production (E&P), and midstream activities.

In the last reported quarter, the company’s loss of 31 cents per share was narrower than the Zacks Consensus Estimate of a loss of 44 cents. In the trailing four quarters, the company delivered a positive earnings surprise of 240.9%, without missing any estimates. This can be attributed to cost-reduction initiatives and improved efficiencies. In the to-be-reported quarter, the company is expected to report a loss of 25 cents.

Hess Corporation Price and EPS Surprise

Hess Corporation Price and EPS Surprise | Hess Corporation Quote

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate of a loss of 25 cents for the first quarter has seen two upward and two downward revisions by firms in the past 30 days. This indicates year-over-year growth of about 7.4%.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $1,490 million, suggesting an improvement of 7.1% from the year-ago reported figure.

Factors at Play

The Zacks Consensus Estimate for first-quarter total production is pegged at 293 thousand barrels of oil equivalents per day (MBoe/d), implying a rise from the year-ago reported figure of 255 Mboe/d and the last reported quarter’s 289 Mboe/d.

The Zacks Consensus Estimate for worldwide average crude oil prices (including hedging) is $53 per barrel, indicating a decline from $59.32 reported in the year-ago quarter. The figure is also expected to be down sequentially from the $55 per barrel mark.  

Worldwide average natural gas liquids prices(including hedges) are expected to be $20.34 per barrel, pointing to a fall from the year-ago reported figure of $21.11 and the last reported quarter’s $21.19. The Zacks Consensus Estimate for worldwide average natural gas prices (including hedging) is $3.86 per thousand cubic feet (Mcf). This estimated figure is same as the year-ago reported figure but down from $4.82 in the last reported quarter.

Although a significant increase in total production is expected to boost Hess’ results in the first quarter, declining worldwide average selling prices of crude oil and natural gas liquids might dampen growth.

What Our Model Unveils

Our proven model does not conclusively show that Hess is likely to beat the Zacks Consensus Estimate in the quarter to be reported. 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. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Hess has an Earnings ESP of -0.50% as the Most Accurate Estimate stands below the Zacks Consensus Estimate of a loss of 25 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hess currently carries a Zacks Rank #3. Though a Zacks Rank of 3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Energy Stocks With Favorable Combination

Here are some companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Oklahoma City, OK-based Continental Resources, Inc. (CLR - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.42%. The company is slated to report first-quarter earnings on Apr 29.

Houston, TX-based ConocoPhillips (COP - Free Report) has a Zacks Rank #2 and an Earnings ESP of +1.55%. The company is scheduled to report quarterly earnings on Apr 30.

Denver, CO-based Antero Resources Corporation (AR - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.59%. The company is set to report first-quarter earnings on May 1.

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