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Key Factors to Impact Ring Energy (REI) This Earnings Season

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Ring Energy, Inc. (REI - Free Report) is set to report second-quarter 2019 financial results on Aug 8, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings per share of 13 cents on revenues of nearly $50 million.

In the last reported quarter, the company delivered an impressive positive earnings surprise of 280.00% on the back of high output growth. Notably, Ring Energy boasts an encouraging earnings surprise history. It surpassed estimates in three of the last four quarters, with average positive surprise of 73.29%.

Ring Energy, Inc. Price, Consensus and EPS Surprise

Ring Energy, Inc. Price, Consensus and EPS Surprise

Ring Energy, Inc. price-consensus-eps-surprise-chart | Ring Energy, Inc. Quote

While investors are keeping their fingers crossed and anticipating that the Permian-focused upstream firm will surpass earnings estimates this time around as well, our model does not predict the same.

Meanwhile, two Permian biggies — namely Apache Corporation (APA - Free Report) and Concho Resources (CXO - Free Report) — reported earnings beat and miss, respectively, in their latest quarterly release. While both the firms bore the brunt of weaker y/y oil and gas prices, Apache was able to more than offset pricing woes through production gains. Notably, two other Permian-focused companies, Diamondback Energy, Inc. (FANG - Free Report) and Pioneer Natural Resources, are expected to post second-quarter results today, after the market closes. 

Which Way are Top and Bottom-Line Estimates Trending?

The Zacks Consensus Estimate for revenues is pegged at $50 million, indicating an improvement from $30 million recorded in the prior-year quarter. The Zacks Consensus Estimate for second-quarter earnings of 13 cents per share also suggests growth from 9 cents recorded in the corresponding quarter of the prior year. However, earnings estimates for the to-be-reported quarter have been revised downward by 2 cents in the past 30 days.

Let’s delve deeper into the factors that are likely to influence Ring Energy’s second-quarter earnings.

Factors at Play

This year’s acquisition of Wishbone Energy’s North Central Basin assets is likely to buoy Ring Energy’s output. Evidently, the company recently provided an update on second-quarter operations, wherein it stated that net production is around 976,000 barrels of oil equivalent (BOE). This reflects significant growth from the year-ago output of 522,622 BOE.

However, realized commodity prices are expected to decline from the year-ago level amid rising fuel inventories, slowdown of global economy and trade tensions, thereby negatively impacting the upcoming results. It expects second-quarter average realized price per BOE to be $51, pointing to a decline from $57.26 recorded in the corresponding quarter of prior year.

While significant output growth is expected to buoy Ring Energy’s second-quarter 2019 earnings, weaker y/y commodity prices may dent overall results.

Earnings Whispers

Our proven model does not conclusively predict that Ring Energy will beat the Zacks Consensus Estimate in the quarter to be reported. This is because it doesn’t have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher — for increasing the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%.

Zacks Rank: Ring Energy currently has a Zacks Rank #3, which increases the predictive power of ESP. But we also need to have a positive ESP to be confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note that we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing a negative estimate revision momentum.

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