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4 Reasons to Add CNX Resources (CNX) to Your Portfolio Now

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Zacks Equity Research
·3 min read
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CNX Resources’ CNX low-cost structure, high-quality assets holding in Marcellus and Utica shales, systematic hedges, as well as efficient debt management are expected to boost its performance.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projections & Earnings Surprise

The Zacks Consensus Estimate for 2021 and 2022 earnings per share is pegged at $1 and $1.05, respectively. The bottom-line estimates have increased 14.9% and 20.7%, respectively, in the past 60 days.

CNX Resources’ average earnings surprise was 211.5% in the last four reported quarters.

Debt to Capital

The company’s total debt to capital is 37.67 compared with the Zacks S&P 500 composite’s average of 41.97. This indicates that it is managing the business far more efficiently than the members of the S&P group.

Regular Investments Drive Production

CNX Resources makes consistent investments to upgrade and maintain the existing infrastructure, as well as expand operations. The company expects 2021 capital expenditure to be $440 million and production volumes to be 550 billion cubic feet equivalent (Bcfe). Production volumes are expected in the range of 500-510 Bcfe for 2020.

Free Cash Flow & Debt Management

CNX Resources expects consolidated E&P capital expenditures to average $300 million annually over the 2022-2026 time period. It expects to generate free cash flow of $515 million annually over the said time period. Strong free cash flow generation will help the company meet debt obligations during this period, improve liquidity and continue with the share buyback program.

The initiatives undertaken will enable it to achieve its seven-year target of generating cumulative free cash flow in excess of $3.3 billion. Strong free cash flow generation will help the company meet debt obligation during the 2020-2026 time period.

Price Performance

In the past 12 months, the stock has gained 30.5% compared with the industry’s decline of 30.8%.

Other Stocks to Consider

Other top-ranked stocks in the same space include HighPoint Resources Corporation HPR, Diamondback Energy FANG and Bonanza Creek Energy BCEI, each currently sporting a Zacks Rank #1.

The Zacks Consensus Estimate for 2021 earnings for HighPoint Resources, Diamondback Energy, and Bonanza Creek Energy has moved up 21.3%, 18.8%, and 81.5%, respectively, in the past 60 days.

HighPoint Resources and Diamondback Energy delivered an average earnings surprise of 9.3% and 121.2% in the last four quarters, respectively. The Zacks Consensus Estimate for Bonanza Creek’s top line for 2021 indicates a year-over-year increase of 101.2%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CNX Resources Corporation. (CNX) : Free Stock Analysis Report
 
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
Bonanza Creek Energy, Inc. (BCEI) : Free Stock Analysis Report
 
HIGHPOINT RESOURCES CORP (HPR) : Free Stock Analysis Report
 
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Zacks Investment Research