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Cimarex (XEC) Down 16.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Cimarex Energy (XEC - Free Report) . Shares have lost about 16.9% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Cimarex Energy Q1 Earnings Miss Due to Reduced Prices

Cimarex Energyreported first-quarter 2019 earnings per share of $1.20, failing to beat the Zacks Consensus Estimate of $1.37 and declining from the year-ago quarter’s $1.82. The underperformance can be primarily blamed on declining realized commodity prices.   

Total revenues of $577 million marginally beat the Zacks Consensus Estimate of $576 million and were also higher than $567.1 million recorded a year ago. Higher Permian activities attributed to the strong numbers.  

Operational Highlights

In the quarter under review, total production averaged 258.9 thousand barrels of oil equivalent (MBOE) per day, up 26% year over year on considerably higher activities in the Permian Basin.

Oil volumes rose 22% to 79.4 thousand barrels per day (MBbls/d) on a year-over-year basis. Moreover, natural gas volumes increased almost 20% to 639.1 MMcf/d year over year. Natural gas liquids (NGL) volumes jumped 41.1% year over year to 73 MBbls/d.

With realized prices for natural gas declining 16.2% to $1.91 per thousand cubic feet, the same for crude oil and NGL fell 18.5% and 19% year over year to $48.87 per barrel and $16.44 per barrel, respectively.          

Through the March quarter, this upstream energy player brought online 38 gross wells.   

Financial Condition

As of Mar 31, 2019, the company had cash and cash equivalents of $20.9 million. Net long-term debt was almost $2 billion, which represents a debt-to-capitalization ratio of almost 34.5%. 

Cimarex's cash flow from operating activities, adjusted, totaled $351.1 million, down from $367.2 million in the prior-year quarter. The company spent $332.7 million on exploration and development in the first quarter.  

Guidance

Cimarex projects total daily production for the June quarter of 2019 in the range of 263-275 MBoE. The company also announced its projections of daily oil equivalent productions for 2019 in the band of 260-275 MBoE.

For 2019, the company continues to project capital spending between $1.4 billion and $1.5 billion on exploration & development activities.

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 -6.46% due to these changes.

VGM Scores

At this time, Cimarex has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 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, Cimarex has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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