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Energy Stock Earnings Lineup for Oct 31: APA, NFX & More

Nilanjan Choudhury
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Energy Stock Earnings Lineup for Oct 31: APA, NFX & More

Here is a sneak peek into how five energy stocks are poised ahead of their earnings releases on Oct 31.

We are entering the heart of the Q3 earnings season for energy, with a host of companies expected to come out with results by the end of this week. This earnings season, strong oil and natural gas prices are in the companies’ favor.

Q3 Report Card: Firming Oil, Gas Realizations

Crude was supported by a variety of catalysts, including the risk to Iranian supply, a series of buoyant weekly EIA inventory numbers and doubts over OPEC’s ability to boost production in the midst of strong demand. The third quarter saw oil benchmark in the United States reach its highest settlement since 2014. To be precise, the commodity finished September at $73.25 per barrel. A year ago, crude futures hovered around the $52 per barrel mark.

Meanwhile, natural gas managed to breach the psychologically important $3 level as inventories remain significantly below their five-year average ahead of the upcoming winter. The fuel ended the quarter at $3.008 per MMBtu – essentially where it was a year ago.

Robust Prices Leads to Bullish Expectations

This solid backdrop, which is expected to strengthen over the course of this year, has breathed life back into the sector. Consequently, the third-quarter numbers should be good on the corporate earnings front.

Per the latest Earnings Trends Report dated Oct 24, the energy sector is poised to record the highest growth among all sectors in the third quarter. Per our expectations, the sector’s earnings are expected to grow 85.5% from third-quarter 2017 and the top line is likely to improve 16.7% from the year-ago level.

Stocks Expected to Report Earnings on Oct 31

Apache Corporation APA will report third-quarter 2018 earnings after the closing bell. The Houston, TX-based oil and gas explorer is expected to benefit from the improving commodity price environment and strong production growth. Increase in production from its Permian Basin assets is the key catalyst.

As far as earnings surprises are concerned, the company is on an excellent footing, having gone past the Zacks Consensus Estimate in each of the last four reports.

Apache is likely to deliver a positive earnings surprise in third-quarter 2018 too as it has the favorable combination of an Earnings ESPof +4.85% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

According to the Zacks model, a company with a Zacks Rank #1, 2 or 3 (Hold) has a good chance of beating estimates, if it also has a positive Earnings ESP. Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Apache Corporation Price and EPS Surprise

 

Apache Corporation Price and EPS Surprise | Apache Corporation Quote

Meanwhile, Newfield Exploration Company’s NFX third-quarter 2018 results – also scheduled after the closing bell – are expected to benefit from higher natural gas production and realized prices. (Read More: Is a Beat in Store for Newfield This Earnings Season?)

Moreover, the leading operator within the SCOOP and STACK plays has a favorable combination of a Zacks Rank #2 and an Earnings ESP of +0.41%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Notably, the company’s results surpassed the Zacks Consensus Estimate in all the trailing four quarters, delivering an average positive earnings surprise of 17.7%.

Newfield Exploration Company Price and EPS Surprise

 

Newfield Exploration Company Price and EPS Surprise | Newfield Exploration Company Quote

Independent petroleum refiner HollyFrontier Corporation HFC is scheduled to report third-quarter 2018 results before the opening bell. Regarding earnings surprise history, HollyFrontier has a mixed record of beating estimates twice in the trailing four quarters.

The company is expected to benefit from higher refining index (an indicative measure of refining margins) in the Rocky Mountain region. HollyFrontier’s diversification strategy via investing in midstream activities along with the Lubricants and Specialty Products unit is also likely to provide support to the company’s overall earnings.

However, the downstream operator has an unfavorable combination of a Zacks Rank #3 and an Earnings ESP of -2.69%, possibly reflecting lower index values for the company’s largest refining region - Mid-Continent. (Read More: HollyFrontier to Report Q3 Earnings: Factors at Play)

HollyFrontier Corporation Price and EPS Surprise

 

HollyFrontier Corporation Price and EPS Surprise | HollyFrontier Corporation Quote

Hess Corporation HES will report third-quarter 2018 earnings after the closing bell. One of the largest players in the deepwater Gulf of Mexico, the independent exploration and production company should be positively impacted by higher selling price of oil in the United States.

Hess, which went past the Zacks Consensus Estimate thrice in the last four reports, also has a favorable combination of a Zacks Rank #2 and an Earnings ESP of +61.91%.

Hess Corporation Price and EPS Surprise

 

Hess Corporation Price and EPS Surprise | Hess Corporation Quote

Then there is Williams Companies Inc. WMB coming up with July-September operational results Wednesday evening. While improving natural gas prices is likely to have a positive effect on the energy infrastructure provider’s core operations, increased expenses might put pressure on its earnings and financials.

Therefore, the chances of Williams beating the Zacks Consensus Estimate are less, although it has a Zacks Rank of 3. This is because it has an Earnings ESP of -4.55%. (Read More: Williams Q3 Earnings: Gas Price Rise to Offset Cost Woe?)

As it is, Williams has managed to surpass earnings estimates in just one of the trailing four quarters, with an average negative surprise of 6.08%.

Williams Companies, Inc. (The) Price and EPS Surprise

 

Williams Companies, Inc. (The) Price and EPS Surprise | Williams Companies, Inc. (The) Quote

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HollyFrontier Corporation (HFC) : Free Stock Analysis Report
 
Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
 
Apache Corporation (APA) : Free Stock Analysis Report
 
Newfield Exploration Company (NFX) : Free Stock Analysis Report
 
Hess Corporation (HES) : Free Stock Analysis Report
 
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