Will Vanguard Natural (VNR) Earnings Surprise this Season? - Analyst Blog
Vanguard Natural Resources, LLC VNR is expected to release first-quarter 2015 results after the close of the trading session on Friday, May 1.
The company had failed to meet the Zacks Consensus Estimate in three of the trailing four quarters with an average negative surprise of 13.53%. In the last reported quarter, Vanguard failed to meet the Zacks Consensus Estimate by 11 cents.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Being a firm in the oil and gas exploration and production industry, Vanguard’s earnings are expected to be hampered owing to the weak commodity pricing environment. The company lowered distribution by about 48% in February, which is an indication of its pressured financials.
However, the company has hedged majority of its production for 2015 at promising prices. The company has hedged 77% of oil at $76 per barrel and 82% of gas at $4.32 per million cubic feet equivalent. This should provide a cushion against the current volatile pricing environment.
Additionally, capital spending toward the company’s Pinedale and East Haynesville properties are expected to have impressive returns, aiding earnings.
Earnings Whispers
Our proven model does not conclusively show that Vanguard is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as elaborated below.
Zacks ESP: Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. The Most Accurate estimate and the Zacks Consensus Estimate stand at 14 cents.
Zacks Rank: Vanguard carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
While earnings beat looks uncertain for Vanguard, here are some firms, which have the right combination of elements to post an earnings beat this quarter:
Energy Transfer Equity, L.P. ETE has an Earnings ESP of +27.27% and a Zacks Rank #1 (Strong Buy). The company is slated to release earnings on May 5.
Western Refining, Inc. WNR has an Earnings ESP of +6.73% and a Zacks Rank #2 (Buy). The company is scheduled to release earnings on May 5.
TC PipeLines, LP TCP has an Earnings ESP of +10.67% and a Zacks Rank #2. The company is expected to release earnings on May 7.
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