Cimarex Energy Co. (XEC - Free Report) is set to release second-quarter 2019 results on Aug 5, after the closing bell.
In the last reported quarter, the upstream energy player posted a negative earnings surprise of 12.4%. However, the company surpassed the Zacks Consensus Estimate twice in the last four quarters, with a four-quarter average positive earnings surprise of 7.2%.
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 expect from the company’s upcoming earnings release.
The Zacks Consensus Estimate of $1.20 for second-quarter 2019 earnings has been revised downward in the past seven days. The figure indicates a year-over-year decline of almost 24.5%.
Nonetheless, the consensus estimate for revenues of $595.3 million suggests an increase of 7% from the year-ago quarter.
Now let’s take a look at the factors that will possibly give shape to the upcoming results.
Factors to Consider
The Zacks Consensus Estimate for the company’s second-quarter production from the prolific Permian basin is pegged at 179 thousand barrels of oil equivalent per day (MBoe/d), indicating a rise from 121.7 MBoe/d in the year-earlier period.
From the Mid-Continent region, the Zacks Consensus Estimate for production stands at 90 MBoe/d, higher than the year-ago quarter’s 88.9 MBoe/d.
Owing to higher expected production volumes from the Permian and the Mid-Continent areas, total production is likely to increase by a solid margin. The Zacks Consensus Estimate for the explorer’s total production for the June quarter of 2019 is pegged at 270 MBoe/d, up from 211.4 MBoe/d in the year-ago quarter.
Although the quarterly production picture looks favorable and is likely to support the bottom line, the expected realized prices of the commodities tell a different tale. Notably, the Zacks Consensus Estimate for average realized natural gas price of $1.09 per thousand cubic feet calls for a decline from the year-ago reported figure of $1.65.
Moreover, the Zacks Consensus Estimate for average realized oil price is $55 per barrel, implying a decline from the year-ago $61. Also, the Zacks Consensus Estimate for average realized natural gas liquids price of $15.80 per barrel suggests a decline from the year-ago reported figure of $22.29.
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 -2.56%. 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 #3. Though a Zacks Rank of 3 increases the predictive power of ESP, a negative 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 With Favorable Combination
While an earnings beat looks uncertain for Cimarex, here are a few companies from the energy space you may want to consider on the basis of our model, which shows that they have the right combination of elements to post a beat this quarter:
TC Energy Corporation (TRP - Free Report) has an Earnings ESP of +0.98% and a Zacks Rank #2. The company is anticipated to release earnings on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Callon Petroleum Company (CPE - Free Report) has an Earnings ESP of +0.84% and a Zacks Rank #3. The company is set to release earnings on Aug 6.
Independence Contract Drilling, Inc. (ICD - Free Report) has an Earnings ESP of +18.18% and a Zacks Rank #3. The company is anticipated to release earnings on Aug 1.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>