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Cabot (COG) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

Cabot Oil & Gas Corporation COG is set to report third-quarter 2019 results, after the closing bell on Thursday Oct 24.

The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 27 cents on revenues of $451.5 million.

The Zacks Consensus Estimate for third-quarter earnings has been revised downward 10% in the past 30 days. Given this backdrop, let’s delve into the factors that might have influenced the company’s performance in the September quarter.

Factors at Play

Cabot is focused on high-impact natural gas-driven drilling. As a result, its acreage in the Marcellus shale play is expected to have placed it well for significant output growth in the to-be-reported quarter. The Zacks Consensus Estimate for third-quarter natural gas production is pegged at 219 billion cubic feet (Bcf), indicating a 17.11% increase from 187 Bcf a year ago. Investors should know that Cabot’s production comprises 100% natural gas.

However, the Zacks Consensus Estimate for average natural gas price realization (including the impact of its hedging program) for third-quarter 2019 is pegged at $2.04 per thousand cubic feet, implying a 13.55% decrease from $2.36 reported a year earlier. This might have affected the company’s third-quarter performance.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Cabot this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). But this is not the case here.

Earnings ESP: Cabot has an Earnings ESP of -2.56%. Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cabot currently has a Zacks Rank #3.

Highlights of Q2 Earnings & Surprise History:

In the last reported quarter, the company’s earnings per share — adjusted for special items — of 36 cents surpassed the Zacks Consensus Estimate of 33 cents. Moreover, the bottom line improved on a year-over-year basis, backed by lower costs and slightly higher-than-anticipated production.

As far as earnings surprises are concerned, this Houston-based independent gas exploration company’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average positive surprise being 1.37%. This is depicted in the graph below:

Cabot Oil & Gas Corporation Price and EPS Surprise

Cabot Oil & Gas Corporation Price and EPS Surprise
Cabot Oil & Gas Corporation Price and EPS Surprise

Cabot Oil & Gas Corporation price-eps-surprise | Cabot Oil & Gas Corporation Quote

Other Stocks to Consider

While earnings beat looks uncertain for Cabot, here are some companies from the energy space that you may want to consider on the basis of our model, which shows that these have the right combination of elements to beat on earnings in the upcoming quarterly reports:

The Williams Companies, Inc. WMB has an Earnings ESP of +1.63% and a Zacks Rank of 3. The energy infrastructure provider is scheduled to release earnings on Oct 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Patterson-UTI Energy, Inc. PTEN has an Earnings ESP of +0.38% and is Zacks #3 Ranked. The oilfield service provider is set to release earnings on Oct 24.

National Oilwell Varco, Inc. NOV has an Earnings ESP of +16.00% and is a #3 Ranked stock. This manufacturer and designer of equipment used in onshore and offshore oil and gas drilling is scheduled to release earnings on Oct 28.

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