Back to top

Image: Bigstock

Is a Beat Likely for Centennial (CDEV) This Earnings Season?

Read MoreHide Full Article

Centennial Resource Development, Inc. (CDEV - Free Report) is expected to beat estimates when it reports fourth-quarter 2019 results on Feb 24, after the closing bell.

In the last reported quarter, the company came up with earnings of a penny, missing the Zacks Consensus Estimate of 2 cents per share due to lower commodity price realization and increased lease operating expenses.

The firm beat the Zacks Consensus Estimate once in the last four quarters, as shown in the chart below.

CENTENNIAL RES Price and EPS Surprise

CENTENNIAL RES Price and EPS Surprise

CENTENNIAL RES price-eps-surprise | CENTENNIAL RES Quote

Let’s see how things have shaped up prior to the announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter earnings of 5 cents per share has seen four upward revisions and one downward movement in the past 30 days. The figure suggests a year-over-year decline of 58.3%.

Further, the Zacks Consensus Estimate for revenues is pegged at $241.9 million for the quarter, indicating a rise of 8.7% from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Centennial this time around. This is because it has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Centennial has an Earnings ESP of +14.87%. This is because the Most Accurate Estimate of 6 cents is pegged higher than the Zacks Consensus Estimate of 5 cents per share.

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

Zacks Rank: It currently carries a Zacks Rank #3.

Factors Driving the Better-Than-Expected Earnings

Centennial has a huge acreage position in the Delaware Basin, part of the prolific Permian Basin, which is likely to have enabled it to generate strong fourth-quarter production. The Zacks Consensus Estimate for fourth-quarter production is pegged at 76,000 barrels of oil equivalent per day (Boe/d), indicating an increase from 69,609 Boe/d in the year-ago period.

The Zacks Consensus Estimate for fourth-quarter crude production is pegged at 43,110 barrels per day (Bbls/d), indicating an increase from 39,978 Bbls/d in the year-ago period. Crude oil constituted the majority of the company’s production. 

The Zacks Consensus Estimate for average crude sales price is pegged at $53 per barrel, suggesting an increase from the year-ago quarter’s $47.95. The potential increase in oil production and realized price is expected to have boosted the company’s bottom line.

Other Stocks to Consider

Some other energy stocks with the perfect mix of elements to beat on earnings in the upcoming quarterly release are:

EQT Corporation (EQT - Free Report) has an Earnings ESP of +34.32% and a Zacks Rank #3. The company is set to release quarterly earnings on Feb 27. You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources, Inc. (EOG - Free Report) has an Earnings ESP of +0.18% and a Zacks Rank #3. The company is set to release quarterly earnings on Feb 27.

Matador Resources Company (MTDR - Free Report) has an Earnings ESP of +0.11% and a Zacks Rank #3. The company is set to release quarterly earnings on Feb 25.

Free: Zacks’ Single Best Stock Set to Double

Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.

See 5 Stocks Set to Double>>