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Here Come the Blockbuster Energy Earnings

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·4 min read
In this article:
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  • (0:45) - What Are The Current Trends This Earnings Season?

  • (5:15) - Have Stock Analysts Been Too Conservative With Estimates?

  • (11:20) - Will The Banks Make A Run With Higher Interest Rates?

  • (17:05) - Breaking Down The Strong Earnings For Energy

  • (22:35) - Episode Roundup: WTFC, PNC, JPM, PXD, OXY, CVX, XOM

  • Podcast@Zacks.com

 

Welcome to Episode #312 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, she’s joined by Zacks Director of Research, Sheraz Mian, to discuss the earnings trends from the first quarter earnings season.

So far, the earnings reports haven’t been as “bad” as the Street was expecting. Many companies are reporting inflationary pressures but they’re also still able to raise prices and consumer demand has been strong.

What About the Financials?

The banks have been in the spotlight as the Federal Reserve is on tap to continue to raise interest rates. Rising rates normally provides a boost to bank earnings.

Investors should look to regional and community banks for the biggest earnings upside. For example, 6 estimates are higher for Chicago-based Wintrust Financial WTFC in the last week.

Wintrust’s 2022 Zacks Consensus Estimate has jumped to $7.54 from $6.89 during that time.

Wintrust shares are down 2.7% year-to-date. It is attractively valued, with a forward P/E of 12.3 and a dividend yielding 1.5%.

What About Energy?

Energy was the best performing sector in 2021 and remains the champion of 2022.

It is also one of the few industries to have positive earnings estimate revisions. The others include Construction, Autos and Medical.

Earnings in the sector are expected to rise in the first quarter to $34.7 billion from $11.1 billion a year ago.

Big Cap Energy Stocks with Big Earnings Revisions

1.       Pioneer Natural Resources PXD

Pioneer Natural Resources is one of the large independent oil and natural gas companies that drills in the Permian Basin.

The analysts are bullish about 2022. 4 estimates are higher with just 1 lower in the last week for the full year. The 2022 Zacks Consensus Estimate has jumped to $31.01 from $22.11 in the last 3 months.

Pioneer Natural Resources only made $13.26 last year so that is earnings growth of 133.9%.

It is scheduled to report earnings on May 4.

Are the analysts still being too conservative on earnings for Pioneer?

2.       Occidental Petroleum OXY

Occidental Petroleum has also had its full year earnings estimates revised higher in the last week.

3 estimates are higher and 1 has been cut during that time. But it has pushed up the Zacks Consensus Estimate to $9.20 from $3.56 in the last 90 days.

That’s expected earnings growth of 261% as Occidental Petroleum earned just $2.55 last year.

Occidental Petroleum reports earnings on May 10. It’s a Zacks Rank #1 (Strong Buy).

3.       Chevron CVX

Chevron also has rising earnings estimates. 2 have been raised, and 1 cut, in the last week.

That has pushed full year earnings up to $16.83 from $10.47 in the last 90 days.

That is earnings growth of 107% as Chevron made just $8.13 last year.

Shares of Chevron trade at just 9.4x even though they have gained 33% year-to-date.

Chevron, a Zacks #2 (Buy) stock, reports earnings on Apr 29.

4.       ExxonMobil XOM

ExxonMobil is also reporting earnings on Apr 29, along with Chevron. Analysts have done the same revisions on its estimates, with 2 higher, and just 1 lowered, in the last week.

That has pushed up the Zacks Consensus to $9.84 from $6.48. That’s earnings growth of 82% over 2021 where earnings were just $5.38.

ExxonMobil is up 35% year-to-date but still trades with a forward P/E of just 8.4.

Are analysts still too cautious on ExxonMobil in 2022?

What Else Do You Need to Know About Q1 Earnings Season?

Tune into this week’s podcast to find out.

[In full disclosure, Tracey owns shares of PXD in her personal portfolio.]


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
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Wintrust Financial Corporation (WTFC) : Free Stock Analysis Report
 
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