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Cimarex (XEC) to Report Q1 Earnings: What's in the Cards?

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Cimarex Energy Co.  is set to release first-quarter 2019 results on May 8, after the closing bell.

In the last reported quarter, the upstream energy player posted a positive earnings surprise of 13.1%. Moreover, the company surpassed the Zacks Consensus Estimate thrice in the last four quarters, with average positive earnings surprise of 12%. This is depicted in the graph below:

Cimarex Energy Co Price and EPS Surprise

Cimarex Energy Co Price and EPS Surprise | Cimarex Energy Co Quote

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

Which Way are Estimates Treading?

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

The Zacks Consensus Estimate of $1.37 for first-quarter 2019 earnings has remained unchanged in the past seven days. The figure indicates a year-over-year decline of 24.7%.

Nonetheless, the consensus estimate for revenues of $575.7 million suggests an increase of 1.5% from the year-ago quarter.

Now let’s delve deeper to find out the factors impacting the upcoming results.

Factors to Consider

Cimarex, which is a leading explorer and producer of oil and natural gas with prime focus on the prolific Permian and Mid-Continent regions, is likely to gain from a surge in production in the Permian Basin. The Zacks Consensus Estimate for the company’s first-quarter production is pegged at 250 thousand barrels of oil equivalent per day (MBoe/d), indicating a rise from 206.1 MBoe/d in the year-earlier period.

The Zacks Consensus Estimate for average realized natural gas price of $1.89 per per thousand cubic feet calls for a decline from the year-ago reported figure of $2.28.

Moreover, the Zacks Consensus Estimate for average realized oil price is $48.46 per barrel, implying a decline from the year-ago reported figure of $59.93.

The Zacks Consensus Estimate for average realized natural gas liquids price of $18.64 per barrel calls for a decline from the year-ago reported figure of $20.19.  

Although the expected rise in oil equivalent production will support Cimarex’s bottom line, the projected decline in price realization for all commodities can result in a 24.7% year-over-year decline in quarterly earnings.

Earnings Whispers

Our proven model does not suggest a beat for Cimarex this earnings season. That is because a stock needs to have 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, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -0.70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cimarex currently carries a Zacks Rank #2. Though a Zacks Rank of 2 increases the predictive power of ESP, a -0.70% ESP makes surprise prediction difficult.     

Conversely, Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

Energy Stocks WithFavorable 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.

Frisco, TX-based Comstock Resources, Inc. (CRK - Free Report) has a Zacks Rank #2 and an Earnings ESP of +11.95%. The company is scheduled to report quarterly earnings on May 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

Oklahoma City, OK-based Chaparral Energy, Inc. has a Zacks Rank #2 and an Earnings ESP of +110.00%. The company is set to report first-quarter earnings on May 9.

Calgary, Canada-based Canadian Natural Resources Limited (CNQ - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.85%. The company is slated to report first-quarter earnings on May 9.

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