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Here's Why You Should Hold Pioneer Natural (PXD) Stock Now
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Pioneer Natural Resources Company (PXD - Free Report) is well poised to grow on the back of strength in the Permian, a ‘super basin’. However, weak realized commodity prices remain a concern for now.
The Irving, TX-based oil and gas exploration & production company — with a market cap of $15.2 billion — has an expected earnings growth rate of 8.3% for the next five years. Pioneer Natural beat earnings estimates thrice and missed just once in the last four quarters, with average positive surprise of 7.1%. Its 2020 earnings per share estimates of $1.14 have witnessed six upward and five downward revisions in the past 30 days.
Pioneer Natural Resources Company Price and EPS Surprise
Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
A Look at the Positives
Pioneer Natural is a pure-play Permian basin — the most prolific oil resource in the United States — producer. In the Midland basin, the company has the largest acreage position with operations across 750,000 gross acres of land. In the prolific basin, Pioneer Natural has identified more than 20,000 drilling sites that are likely to provide the company with decades of crude production. It has roughly 10 more years of drilling inventory in the region, where it can keep producing without a deceleration in the current output pace. Moreover, given its acreages in the prolific basin, the company does not have to turn to less productive sites.
It revised 2020 capital budget to the band of $1.4-$1.6 billion, representing a decline of roughly 55% from the initial spending budget. Moreover, for 2020, Pioneer Natural’s revised oil equivalent production volumes guidance is projected within 341-359 thousand barrels of oil equivalent per day (MBoe/d). The midpoint of the range suggests an improvement from the 2019 figure of 345.5 MBoe/d. Thus, despite lower capital spending, the upstream energy firm is expected to see increased production volumes in 2020 on strong operational efficiencies.
Pioneer Natural’s revised oil production volumes for 2020 are expected in the range of 198-208 MBbl/d. Notably, more than 80% of the company’s estimated oil output for the last three quarters of 2020 is backed by crude oil hedges. This will likely offer the upstream energy player significant downside protection.
At the end of the March quarter of 2020, cash balance totaled $784 million. Long-term debt summed $2,140 million, reflecting a debt to capitalization of 17.8%. Notably, the upstream energy player’s debt to capitalization has been persistently lower than the industry over the past few years, reflecting considerably lower debt exposure. Despite an unfavorable business scenario owing to coronavirus-induced dented energy demand, the company is capable of clearing long-term debt with its cash balance and $1.6 billion of credit facilities.
What’s Deterring the Stock?
There are a few factors that are holding back the stock from reaching true potential.
The coronavirus pandemic has dented global energy demand, prompting crude oil to trade in the bearish territory. Since crude accounts for the majority of Pioneer Natural’s production, weak commodity prices are affecting the company’s upstream business. Lower realized prices of commodities hurt its first-quarter 2020 bottom line, which declined to $1.15 from the year-ago quarter’s $1.83.
In the June quarter of 2020, Pioneer Natural expects production costs in the range of $6.50-$8 per BOE, suggesting an increase from $5.17 in the prior quarter. Rising costs will hurt the company’s profit levels.
Its gross trailing 12-month margin is the lowest among peers. This is unlikely to recover anytime soon since the business scenario is not favorable.
To Sum Up
Despite significant prospects, rising production costs and low oil prices are affecting the company. Nevertheless, we believe that systematic and strategic plan of action will drive its long-term growth.
Cabot Oil & Gas beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 6.1%.
CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.
Comstock Resources’ 2020 sales are expected to gain 32.7% year over year.
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Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Here's Why You Should Hold Pioneer Natural (PXD) Stock Now
Pioneer Natural Resources Company (PXD - Free Report) is well poised to grow on the back of strength in the Permian, a ‘super basin’. However, weak realized commodity prices remain a concern for now.
The Irving, TX-based oil and gas exploration & production company — with a market cap of $15.2 billion — has an expected earnings growth rate of 8.3% for the next five years. Pioneer Natural beat earnings estimates thrice and missed just once in the last four quarters, with average positive surprise of 7.1%. Its 2020 earnings per share estimates of $1.14 have witnessed six upward and five downward revisions in the past 30 days.
Pioneer Natural Resources Company Price and EPS Surprise
Pioneer Natural Resources Company price-eps-surprise | Pioneer Natural Resources Company Quote
Let’s delve deeper to find out why this Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
A Look at the Positives
Pioneer Natural is a pure-play Permian basin — the most prolific oil resource in the United States — producer. In the Midland basin, the company has the largest acreage position with operations across 750,000 gross acres of land. In the prolific basin, Pioneer Natural has identified more than 20,000 drilling sites that are likely to provide the company with decades of crude production. It has roughly 10 more years of drilling inventory in the region, where it can keep producing without a deceleration in the current output pace. Moreover, given its acreages in the prolific basin, the company does not have to turn to less productive sites.
It revised 2020 capital budget to the band of $1.4-$1.6 billion, representing a decline of roughly 55% from the initial spending budget. Moreover, for 2020, Pioneer Natural’s revised oil equivalent production volumes guidance is projected within 341-359 thousand barrels of oil equivalent per day (MBoe/d). The midpoint of the range suggests an improvement from the 2019 figure of 345.5 MBoe/d. Thus, despite lower capital spending, the upstream energy firm is expected to see increased production volumes in 2020 on strong operational efficiencies.
Pioneer Natural’s revised oil production volumes for 2020 are expected in the range of 198-208 MBbl/d. Notably, more than 80% of the company’s estimated oil output for the last three quarters of 2020 is backed by crude oil hedges. This will likely offer the upstream energy player significant downside protection.
At the end of the March quarter of 2020, cash balance totaled $784 million. Long-term debt summed $2,140 million, reflecting a debt to capitalization of 17.8%. Notably, the upstream energy player’s debt to capitalization has been persistently lower than the industry over the past few years, reflecting considerably lower debt exposure. Despite an unfavorable business scenario owing to coronavirus-induced dented energy demand, the company is capable of clearing long-term debt with its cash balance and $1.6 billion of credit facilities.
What’s Deterring the Stock?
There are a few factors that are holding back the stock from reaching true potential.
The coronavirus pandemic has dented global energy demand, prompting crude oil to trade in the bearish territory. Since crude accounts for the majority of Pioneer Natural’s production, weak commodity prices are affecting the company’s upstream business. Lower realized prices of commodities hurt its first-quarter 2020 bottom line, which declined to $1.15 from the year-ago quarter’s $1.83.
In the June quarter of 2020, Pioneer Natural expects production costs in the range of $6.50-$8 per BOE, suggesting an increase from $5.17 in the prior quarter. Rising costs will hurt the company’s profit levels.
Its gross trailing 12-month margin is the lowest among peers. This is unlikely to recover anytime soon since the business scenario is not favorable.
To Sum Up
Despite significant prospects, rising production costs and low oil prices are affecting the company. Nevertheless, we believe that systematic and strategic plan of action will drive its long-term growth.
Stocks to Consider
Some better-ranked players in the energy space include Cabot Oil & Gas Corporation , CNX Resources Corporation (CNX - Free Report) and Comstock Resources, Inc. (CRK - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cabot Oil & Gas beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 6.1%.
CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.
Comstock Resources’ 2020 sales are expected to gain 32.7% year over year.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>