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ConocoPhillips (COP) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of ConocoPhillips (COP)? Shares have been on the move with the stock up 19.9% over the past month. The stock hit a new 52-week high of $109.98 in the previous session. ConocoPhillips has gained 51.7% since the start of the year compared to the 33.7% move for the Zacks Oils-Energy sector and the 62.8% return for the Zacks Oil and Gas - Integrated - United States industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 5, 2022, ConocoPhillips reported EPS of $3.27 versus consensus estimate of $3.24 while it beat the consensus revenue estimate by 17.3%.

For the current fiscal year, ConocoPhillips is expected to post earnings of $14.78 per share on $70.21 billion in revenues. This represents a 146.09% change in EPS on a 45.22% change in revenues. For the next fiscal year, the company is expected to earn $13.01 per share on $62.94 billion in revenues. This represents a year-over-year change of -12.03% and -10.35%, respectively.

Valuation Metrics

ConocoPhillips may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

ConocoPhillips has a Value Score of B. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 7.4X current fiscal year EPS estimates, which is not in-line with the peer industry average of 12.7X. On a trailing cash flow basis, the stock currently trades at 9.4X versus its peer group's average of 9.4X. Additionally, the stock has a PEG ratio of 0.39. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, ConocoPhillips currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if ConocoPhillips meets the list of requirements. Thus, it seems as though ConocoPhillips shares could have a bit more room to run in the near term.

How Does COP Stack Up to the Competition?

Shares of COP have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Berry Corporation (BRY). BRY has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of A.

Earnings were strong last quarter. Berry Corporation beat our consensus estimate by 13.33%, and for the current fiscal year, BRY is expected to post earnings of $3.67 per share on revenue of $768.07 million.

Shares of Berry Corporation have gained 0.1% over the past month, and currently trade at a forward P/E of 3.01X and a P/CF of 5.19X.

The Oil and Gas - Integrated - United States industry is in the top 11% of all the industries we have in our universe, so it looks like there are some nice tailwinds for COP and BRY, even beyond their own solid fundamental situation.


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