We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Cabot Oil & Gas (COG) is Worth Betting on Now
Read MoreHide Full Article
Cabot Oil & Gas Corporation has witnessed upward estimate revisions for its 2020 earnings in the past 30 days. In fact, five out of seven analysts have revised their estimates upward. Also, despite the coronavirus-induced unfavourable business environment, this leading upstream energy player’s stock price has increased 7% year to date.
The company, carrying Zacks Rank #1 (Strong Buy), has a strong footing in the prolific Marcellus shale play. In the gas-rich resource, the upstream firm is planning to drill and place on production net of 60 to 70 wells through 2020. This is likely to aid long-term production growth. In fact, growing production has helped the company report better-than-expected earnings in first-quarter 2020.
Importantly, the natural gas producer believes that its strong operations and production growth story will back to generate positive free cashflows in 2020, sufficient to fund the dividend payments entirely. The company also has strong cost-control initiatives. Cabot Oil & Gas’s operating expenses of $1.46 per thousand cubic feet equivalent (Mcfe) in the March quarter of 2020 was lower than a year ago quarter’s $1.48. Importantly, the company is planning to spend roughly $575 million capital in 2020, lower than $788.4 million in 2019. In spite of the cut in spending, production in 2020 is expected to be in the band of 2,350 to 2,375 million cubic feet equivalent per day (MMcfe/D). The upper limit of the range is higher than year-ago period’s 2,371 MMcfe/D, reflecting improving capital efficiency.
Most importantly, since all of Cabot Oil & Gas’ production comprises natural gas, the company is well poised to capitalize on long-term clean energy demand.
Moreover, the upstream firm’s balance sheet has significantly less debt exposure as compared to the composite stocks in the industry. Notably, the company’s net debt to capitalization ratio of 0.32, is lower than the industry’s 0.38. Also, in the past few years, the ratio has mostly been lower than the industry. Investors should also know that Cabot Oil & Gas has roughly $1.7 billion of liquidity, which can pay off net long-term debt of $1.1 billion, suggesting the company’s strong capacity to repay debt despite adverse business scenario due to the coronavirus pandemic.
Murphy USA is likely to see earnings growth of 7% in the next five years.
Key Energy is expected to witness bottom-line growth of 97.2% in 2020.
CNX Resources has witnessed upward estimate revisions for 2020 bottom line in the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
Image: Bigstock
Here's Why Cabot Oil & Gas (COG) is Worth Betting on Now
Cabot Oil & Gas Corporation has witnessed upward estimate revisions for its 2020 earnings in the past 30 days. In fact, five out of seven analysts have revised their estimates upward. Also, despite the coronavirus-induced unfavourable business environment, this leading upstream energy player’s stock price has increased 7% year to date.
The company, carrying Zacks Rank #1 (Strong Buy), has a strong footing in the prolific Marcellus shale play. In the gas-rich resource, the upstream firm is planning to drill and place on production net of 60 to 70 wells through 2020. This is likely to aid long-term production growth. In fact, growing production has helped the company report better-than-expected earnings in first-quarter 2020.
Importantly, the natural gas producer believes that its strong operations and production growth story will back to generate positive free cashflows in 2020, sufficient to fund the dividend payments entirely. The company also has strong cost-control initiatives. Cabot Oil & Gas’s operating expenses of $1.46 per thousand cubic feet equivalent (Mcfe) in the March quarter of 2020 was lower than a year ago quarter’s $1.48. Importantly, the company is planning to spend roughly $575 million capital in 2020, lower than $788.4 million in 2019. In spite of the cut in spending, production in 2020 is expected to be in the band of 2,350 to 2,375 million cubic feet equivalent per day (MMcfe/D). The upper limit of the range is higher than year-ago period’s 2,371 MMcfe/D, reflecting improving capital efficiency.
Most importantly, since all of Cabot Oil & Gas’ production comprises natural gas, the company is well poised to capitalize on long-term clean energy demand.
Moreover, the upstream firm’s balance sheet has significantly less debt exposure as compared to the composite stocks in the industry. Notably, the company’s net debt to capitalization ratio of 0.32, is lower than the industry’s 0.38. Also, in the past few years, the ratio has mostly been lower than the industry. Investors should also know that Cabot Oil & Gas has roughly $1.7 billion of liquidity, which can pay off net long-term debt of $1.1 billion, suggesting the company’s strong capacity to repay debt despite adverse business scenario due to the coronavirus pandemic.
Other Stocks to Consider
Other prospective stocks in the energy sector are Murphy USA Inc (MUSA - Free Report) , Key Energy Services, Inc. (KEGX - Free Report) and CNX Resources Corporation (CNX - Free Report) . While Murphy and Key Energy sport a Zacks Rank #1 (Strong Buy), CNX Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Murphy USA is likely to see earnings growth of 7% in the next five years.
Key Energy is expected to witness bottom-line growth of 97.2% in 2020.
CNX Resources has witnessed upward estimate revisions for 2020 bottom line in the past 60 days.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>