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ConocoPhillips (COP) to Report Q1 Earnings: What Lies Ahead?

Zacks Equity Research

ConocoPhillips COP is scheduled to report first-quarter 2019 results on Apr 30, before the opening bell.

In the last reported quarter, the upstream energy company’s earnings of $1.13 per share beat the Zacks Consensus Estimate of 99 cents, aided by higher oil realizations and strong volumes from unconventional assets. ConocoPhillips beat estimates in the trailing four quarters, delivering average positive earnings surprise of 15.7%. In the to-be-reported quarter, the company is expected to report earnings of 92 cents per share.

ConocoPhillips Price and EPS Surprise

ConocoPhillips Price and EPS Surprise | ConocoPhillips Quote

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate for first-quarter earnings of 92 cents has witnessed five upward revisions and two downward revisions by firms in the past 30 days. This estimate is indicative of a 4.2% decline from the year-ago reported earnings of 96 cents.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $9.2 billion, suggesting an improvement of 2.2% from the year-ago reported figure.

Factors at Play

The West Texas Intermediate (WTI) crude price in first-quarter 2019 was lower than the year-ago period. In January, February and March, WTI averaged $51.38, $54.95 and $58.15 per barrel respectively, per the U.S. Energy Information Administration. In comparison, WTI averaged $63.70, $62.23 and $62.73 per barrel, respectively, in the first three months of 2018. ConocoPhillips has an oil-heavy portfolio and the year-over-year decline in crude price may hurt the company’s upstream businesses.

The Zacks Consensus Estimate for first-quarter total production is pegged at 1,340 thousand barrels of oil equivalent per day (MBOED), indicating a rise from the year-ago reported figure of 1,269 MBOED but decline from the last reported quarter’s 1,357 MBOED.

The Zacks Consensus Estimate for first-quarter crude production is pegged at 713 thousand barrels per day (MBD), implying a rise from the year-ago reported figure of 636 MBD but decrease from the last reported quarter’s 717 MBD.

The Zacks Consensus Estimate for first-quarter natural gas output is pegged at 2,752 million cubic feet per day (MMCFD), suggesting a decrease from the year-ago reported figure of 2,828 MMCFD and the last reported quarter’s 2,785 MMCFD.

The Zacks Consensus Estimate for natural gas liquids production is pegged at 107 MBD, pointing to growth from 96 MBD in the prior-year period and 105 MBD in the last reported quarter.

Hence, ramp up in year-over-year crude oil and natural gas liquids production is expected to boost first-quarter earnings. However, lower crude prices and natural gas output compared with the year-ago period may play spoilsport in the to-be-reported quarter.

What Our Model Unveils

Our proven model does not conclusively show that ConocoPhillips is likely to beat the Zacks Consensus Estimate in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. ConocoPhillips has an Earnings ESP of 0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 92 cents.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ConocoPhillips currently carries a Zacks Rank #2. Though a Zacks Rank of 2 increases the predictive power of ESP, a 0.00% ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

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.

Energy Stocks With Favorable Combination

Here are some companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Houston, TX-based Apache Corporation APA has a Zacks Rank #2 and an Earnings ESP of +28.93%. The company is scheduled to report quarterly earnings on May 1.

Oklahoma City, OK-based Continental Resources, Inc. CLR has a Zacks Rank #3 and an Earnings ESP of +0.42%. The company is slated to report first-quarter earnings on Apr 29.

Denver, CO-based Antero Resources Corporation AR has a Zacks Rank #3 and an Earnings ESP of +0.59%. The company is set to report first-quarter earnings on May 1.

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Continental Resources, Inc. (CLR) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
Apache Corporation (APA) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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