Is Diamondback (FANG) Poised for a Robust Q3 Earnings Show?
Diamondback Energy FANG is set to release third-quarter results on Nov 6. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $4.90 per share on revenues of $2 billion.
Let’s delve into the factors that might have influenced the Permian-focused oil and gas producer’s performance in the September quarter. But it’s worth taking a look at FANG’s previous-quarter performance first.
Highlights of Q2 Earnings & Surprise History
In the last reported quarter, this Midland, TX-based upstream player missed the consensus mark due to lower overall realization. Diamondback had reported adjusted earnings per share of $3.68 for the second quarter, below the Zacks Consensus Estimate of $3.92. However, revenues of $1.9 billion sneaked past the Zacks Consensus Estimate by 0.4% on higher-than-expected production.
FANG missed the Zacks Consensus Estimate for earnings in three of the last four quarters and beat in the other, resulting in an earnings surprise of (2.7%), on average. This is depicted in the graph below:
Diamondback Energy, Inc. Price and EPS Surprise
Diamondback Energy, Inc. price-eps-surprise | Diamondback 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 24.4% deterioration year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 10.7% decrease from the year-ago period.
Factors to Consider
Diamondback Energy is expected to have benefited from higher production during the third quarter. The company continues to churn out impressive volumes from its wide inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for FANG’s average third-quarter volume is pegged at 442,803 barrels of oil equivalent per day (BOE/d), 13.4% up from the year-ago quarter’s level of 390,630 BOE/d.
On a further bullish note, the decrease in Diamondback Energy’s costs might have buoyed its to-be-reported bottom line. Our estimate for lease operating cost per barrel of oil equivalent (BOE) is pegged at $4.91, indicating a drop from $5.09 reported in the year-ago quarter. Our model also predicts the company’s total cash operating expenses to fall 3.9% year over year to $11.50 per BOE.
Why a Likely Positive Surprise?
Our proven model predicts an earnings beat for Diamondback Energy this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
FANG has an Earnings ESP of +2.23% and a Zacks Rank #3.
Other Stocks to Consider
Diamondback Energy is not the only energy company looking up this earnings cycle. Here are some other firms from the space that you may want to consider on the basis of our model:
Civitas Resources CIVI has an Earnings ESP of +7.46% and a Zacks Rank #2. The firm is scheduled to release earnings on Nov 7.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Civitas Resources beat the Zacks Consensus Estimate for earnings in two of the last four quarters and missed in the other two. It has a trailing four-quarter earnings surprise of 2.7%, on average. Valued at around $7 billion, CIVI has gained 11% in a year.
Delek US Holdings DK has an Earnings ESP of +5.26% and a Zacks Rank #2. The firm is scheduled to release earnings on Nov 7.
Over the past 90 days, Delek US Holdings saw the Zacks Consensus Estimate for 2023 move up 26.5%. Valued at around $1.7 billion, DK has lost 10.6% in a year.
Devon Energy DVN has an Earnings ESP of +0.72% and a Zacks Rank #2. The firm is scheduled to release earnings on Nov 7.
Over the past 90 days, Devon Energy saw the Zacks Consensus Estimate for 2023 move up 7.4%. Valued at around $29.8 billion, DVN has lost 34.7% in a year.
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Devon Energy Corporation (DVN) : Free Stock Analysis Report
Delek US Holdings, Inc. (DK) : Free Stock Analysis Report
Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
Civitas Resources, Inc. (CIVI) : Free Stock Analysis Report
