CVR Energy's (CVI) Q3 Earnings Preview: Factors to Consider
CVR Energy, Inc. CVI is set to release third-quarter results on Oct 30. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $1.88 per share on revenues of $2.4 billion.
Let’s delve into the factors that might have influenced the Sugar Land, TX-based refiner’s results in the September quarter. But it’s worth taking a look at CVR Energy’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last reported quarter, the U.S. downstream operator beat the consensus mark on strong crack spreads. CVR Energy had reported adjusted earnings per share of $1.64, which came above the Zacks Consensus Estimate of $1.20. However, revenues of $2.2 billion generated by the firm had come in 5.1% lower than the consensus mark due to lower ammonia prices.
CVI beat the Zacks Consensus Estimate for earnings in each of the last four quarters, resulting in an earnings surprise of 28.8%, on average. This is depicted in the graph below:
CVR Energy Inc. Price and EPS Surprise
CVR Energy Inc. price-eps-surprise | CVR Energy Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the third-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 1.1% deterioration year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests an 11% decrease from the year-ago period.
Factors to Consider
CVR Energy is expected to have benefited from the positive trends in its key Petroleum segment. In the second quarter of 2023, the unit reported total throughput of 201,000 barrels per day, essentially unchanged from the year-ago quarter. The metric is likely to have increased in the third quarter, with no additional turnarounds planned for the remainder of the year. As it is, crack spreads remained elevated on the back of low product inventories. These factors might have buoyed the revenues and cash flows of CVI.
On a further bullish note, CVR Energy’s cost of materials and other in the April-June period decreased around 26.8% year over year to $2 billion. The downward cost trajectory is likely to have continued in the third quarter of 2023, primarily due to lower RFS compliance-related expenses. This is expected to have buoyed the company’s to-be-reported earnings.
On the negative side, the decline in average realized prices for urea ammonia nitrate might have somewhat dented the company’s to-be-reported bottom line. CVR Energy’s average prices in the April-June period fell around 43% year over year. The downward pricing trajectory is likely to have continued in the third quarter of 2023 due to a weak global market. This is expected to have had an adverse effect on the company’s to-be-reported earnings.
What Does Our Model Say?
The proven Zacks model does not conclusively show that CVR Energy is likely to beat estimates in the third quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: CVR Energy has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.88 per share each.
Zacks Rank: CVI currently carries a Zacks Rank #1, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult this earnings season.
Stocks to Consider
While an earnings beat looks uncertain for CVR Energy, here are some firms from the energy space that you may want to consider on the basis of our model:
Chevron Corporation CVX has an Earnings ESP of +1.08% and a Zacks Rank #2. The firm is scheduled to release earnings on Oct 27.
Chevron beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 4.8%, on average. Valued at around $315.8 billion, CVX has lost 3.6% in a year.
California Resources Corporation CRC has an Earnings ESP of +22.05% and a Zacks Rank #1. The firm is scheduled to release earnings on Nov 1.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, California Resources saw the Zacks Consensus Estimate for 2023 move up 1.4%. Valued at around $3.7 billion, CRC has gained 24.6% in a year.
Murphy USA MUSA has an Earnings ESP of +0.57% and a Zacks Rank #2. The firm is scheduled to release earnings on Nov 1.
Over the past 60 days, Murphy USA saw the Zacks Consensus Estimate for 2023 move up 2.8%. Valued at around $7.8 billion, MUSA has gained 22.4% in a year.
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Chevron Corporation (CVX) : Free Stock Analysis Report
CVR Energy Inc. (CVI) : Free Stock Analysis Report
Murphy USA Inc. (MUSA) : Free Stock Analysis Report
California Resources Corporation (CRC) : Free Stock Analysis Report
