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Here's What to Expect From ConocoPhillips' (COP) Q4 Earnings

·4 min read

ConocoPhillips COP is scheduled to report fourth-quarter 2020 results on Feb 2, before the opening bell.

In the last reported quarter, the upstream energy company’s adjusted loss of 31 cents per share missed the Zacks Consensus Estimate by a penny, primarily due to lower realized commodity prices and production volumes. Although the firm beat earnings estimates once in the trailing four quarters while missed the same on the other three occasions, it delivered an average surprise of 10.9%.

ConocoPhillips Price and EPS Surprise

ConocoPhillips Price and EPS Surprise
ConocoPhillips Price and EPS Surprise

ConocoPhillips price-eps-surprise | ConocoPhillips Quote

Let’s see how things have shaped up prior to the earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for fourth-quarter loss per share of 20 cents has witnessed two upward and five downward revisions by firms in the past 30 days. This estimate is indicative of a 126.3% decline from the year-ago reported figure.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $5.2 billion, suggesting a decline of 35.6% from the year-ago reported figure.

Factors Driving Fourth-Quarter Earnings

Being primarily involved in the exploration and production of oil and natural gas, ConocoPhillips’ earnings and revenues are directly related to commodity prices. As the demand for energy products was destroyed by the coronavirus pandemic, commodity prices were in the bearish territory in the fourth quarter. Even though oil and gas prices improved sequentially in the quarter, the numbers were way less than the year-ago level. This might have affected the company’s bottom line in the fourth quarter.

Along with the third-quarter result announcement, it provided production guidance for fourth-quarter 2020. It expects fourth-quarter production in the range of 1,125-1,165 thousand barrels of oil equivalent per day (MBoe/d). Although the provided range indicates an improvement from the third-quarter figure, primarily due to resumption of curtailed volumes, it still suggests a decrease from the year-ago level of 1,334 MBoe/d.

Therefore, a year-over-year decrease in crude prices and hydrocarbon production in the fourth quarter is expected to have affected the upstream company’s profits. However, its efforts to reduce costs might have partially offset the negatives.

What the Quantitative Model Suggests

Our proven model does not conclusively predict an earnings beat for ConocoPhillips this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: ConocoPhillips has an Earnings ESP of -26.38%. This is because the Most Accurate Estimate for the quarter is currently pegged at a loss of 25 cents, wider than the Zacks Consensus Estimate of a loss of 20 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: ConocoPhillips currently carries a Zacks Rank #3.

Stocks That Warrant a Look

Here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Diamondback Energy, Inc. FANG has an Earnings ESP of +9.91% and a Zacks Rank #2, currently. The company is scheduled to release quarterly earnings on Feb 22. You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon Petroleum Company CPE has an Earnings ESP of +5.64% and is a Zacks #3 Ranked player. The company is scheduled to release fourth-quarter results on Feb 24.

Continental Resources, Inc. CLR has an Earnings ESP of +17.97% and a Zacks Rank of 3. It is scheduled to report fourth-quarter results on Feb 16.

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ConocoPhillips (COP) : Free Stock Analysis Report

Continental Resources, Inc. (CLR) : Free Stock Analysis Report

Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report

Callon Petroleum Company (CPE) : Free Stock Analysis Report

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