What's in Store for EXCO Resources (XCO) this Earnings? - Analyst Blog
EXCO Resources Inc. XCO, an upstream energy firm, will release its first-quarter 2015 financial results on Apr 28, after the closing bell.
Last quarter, EXCO Resources posted a negative earnings surprise of 100.00%. Moreover, during the last four months, the company’s average earnings surprise was negative 28.75%. Let’s see how things are shaping up for this announcement.
Factors to Consider this Quarter
During the January to March quarter, natural gas traded much below the commodity’s marginal cost of production − usually $5–$6 per MMBtu − in North America. Gas comprises more than 89% of EXCO Resources’ production as per fourth-quarter 2014 data.
Moreover, the price of crude oil − the other commodity − was extremely weak during the entire first quarter.
Following the weak commodity prices, we can conclude that the business environment was not favorable for this upstream player.
Earnings Whispers?
Our proven model does not conclusively show that EXCO Resources is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: EXCO Resources currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 8 cents per share.
Zacks Rank: EXCO Resources carries a Zacks Rank #3 (Hold). Though this increases the predictive power, a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Stocks in the energy sector that have both a positive Earnings ESP and a favorable Zacks Rank are:
Marathon Petroleum Corporation MPC with an Earnings ESP of +2.13% and a Zacks Rank #1 (Strong Buy). The company is slated to release earnings on Apr 30.
Suncor Energy Inc. SU with an Earnings ESP of +400.00% and a Zacks Rank #2 (Buy). The company is expected to release earnings on Apr 29.
Cenovus Energy Inc. CVE with an Earnings ESP of +36.36% and a Zacks Rank #2. The company is slated to release earnings on Apr 29.
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SUNCOR ENERGY (SU): Free Stock Analysis Report
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EXCO RESOURCES (XCO): Free Stock Analysis Report
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