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Earthstone (ESTE) Gears Up for Q2 Earnings: What's in Store?

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Earthstone Energy, Inc. (ESTE - Free Report) is scheduled to release second-quarter 2019 results on Aug 7, before the opening bell.

The upstream energy company has a four-quarter average positive earnings surprise of 80.2% even though it has beat the Zacks Consensus Estimate in only one quarter. Let’s see how things are shaping up prior to the upcoming announcement.

Which Way Are Estimates Treading?

Let’s look at the estimate revision trend to get a clear picture of what analysts are expecting from the company’s upcoming results.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 17 cents. The consensus mark suggests a year-over-year surge of 750%.

Moreover, the Zacks Consensus Estimate for revenues is pegged at $42.6 million, calling for an improvement of 14.7% from the year-ago quarter’s tally.

Earthstone Energy, Inc. Price and EPS Surprise


Earthstone Energy, Inc. Price and EPS Surprise

Earthstone Energy, Inc. price-eps-surprise | Earthstone Energy, Inc. Quote

Factors Likely to Affect Results

The second-quarter pricing scenario of West Texas Intermediate (WTI) crude was weaker than the year-ago period. However, the commodity’s aggregate price in the June quarter showed some sequential improvement.

Although the tightening of global crude supplies owing to sanctions on Iranian oil export by the United States drove WTI crude, the slowdown in global economy, fueled by intensifying trade tensions between Washington and Beijing, hurt oil demand. In April 2019, the United States tightened the ban on oil from Tehran as it expressed unwillingness to extend sanction waivers on several countries beyond May 2.

Given that oil contributes the maximum to Earthstone’s quarterly production volumes, the year-over-year decline in crude price may hurt the company’s bottom line. 

Earnings Whispers

Our proven model does not show a beat for Earthstone this earnings season. This 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. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earthstone has an ESP of -5.99%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.   

Zacks Rank: Currently, Earthstone carries a Zacks Rank #3.

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.

Stocks to Consider

Here are some firms that you may want to consider on the basis of our model. These have the right combination of elements to beat earnings this quarter.

Sunoco LP (SUN - Free Report) has an Earnings ESP of +14.64% and is a #2 Ranked player. The partnership is slated to release second-quarter 2019 earnings on Aug 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

NuStar Energy L.P. (NS - Free Report) is set to report second-quarter 2019 earnings on Aug 8. The stock has an Earnings ESP of +14.58% and a Zacks Rank #3.

Cheniere Energy, Inc. (LNG - Free Report) is set to report second-quarter 2019 earnings on Aug 8. The stock has an Earnings ESP of +88.46% and a Zacks Rank #2.

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