Crescent Point Energy Corp. (CPG - Free Report) is set to release third-quarter 2019 results before the opening bell on Thursday, Oct 31. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 10 cents per share on revenues of $602.9 million.
The Zacks Consensus Estimate for third-quarter earnings has been revised 25% upward in the last 60 days. Given this backdrop, let’s delve into the factors that might have influenced the company’s performance in the September quarter.
Factors to Consider This Quarter
Crescent Point’s third-quarter bottom line is expected to reflect the impact of production decline. In the second quarter, the company’s daily output of crude oil and natural gas decreased more than 5% compared with last year’s corresponding period to 172,476 barrels of oil equivalent, a trend that most likely continued in the third quarter because of asset dispositions.
Further, the negative effect of production loss was likely magnified by lower realized oil prices. According to the U.S. Energy Information Administration, WTI prices started the third quarter of 2018 around $74 per barrel and exited the period at $73 per barrel. This year, prices started the third quarter at $59 a barrel and fell to $55 at the end of September. The year-over-year fall in realizations has most likely impacted Crescent Point’s earnings and cash flows as 90% of the company’s production is comprised of oil and liquids.
But on a bullish note, cost efficiencies are likely to have lent support to Crescent Point’s third-quarter earnings. The company has managed to keep its operating costs down, which came 5% below budget during the first half of 2019. The cost structure is likely to have improved further in the to-be-reported quarter due to workforce reduction in late 2018, lower downtime and asset sales.
What Does Our Model Say?
The proven Zacks model does not conclusively predict that Crescent Point is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Crescent Point has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 10 cents.
Zacks Rank: Crescent Point has a Zacks Rank of 1.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Highlights of Q2 Earnings & Surprise History
In the last reported quarter, the Calgary-based company beat the consensus mark on prudent cost management. Crescent Point reported adjusted earnings per share of 20 cents that surpassed the Zacks Consensus Estimate by 4 cents.
However, revenues of $707 million missed the Zacks Consensus Estimate of $724 million, hurt by lower production and liquids selling prices.
As far as earnings surprises are concerned, the North American upstream operator is on a solid footing, having gone past the Zacks Consensus Estimate in three of the last four reports. This is depicted in the graph below:
Stocks to Consider
While earnings beat looks uncertain for Crescent Point, here are some firms 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 earnings beat this season:
Callon Petroleum Company (CPE - Free Report) has an Earnings ESP of +0.56% and is Zacks #3 Ranked. The company is scheduled to release earnings on Nov 4.
Gulfport Energy Corporation (GPOR - Free Report) has an Earnings ESP of +3.57% and a Zacks Rank #3. The company is scheduled to release earnings on Oct 31.
Cimarex Energy Co. (XEC - Free Report) has an Earnings ESP of +1.32% and is Zacks #3 Ranked. The company is scheduled to release earnings on Nov 4.
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