CONSOL Energy CNX is slated to report fourth-quarter 2018 financial results on Jan 31, before the opening bell. The company delivered a negative earnings surprise of 10.53% in the last reported quarter. Let’s see how things are shaping up for this earnings season.
What Our Quantitative Model Predicts
Our proven model shows that CONSOL Energy is likely to beat earnings estimates in the to-be-reported quarter as it possesses the correct combination of the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is exactly the case here as you will see below.
Earnings ESP: The company’s Earnings ESP is +5.26%. This is because the Most Accurate Estimate currently stands at 28 cents, while the Zacks Consensus Estimate is pegged a penny lower.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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Zacks Rank: Currently, CONSOL Energy has a Zacks Rank #3 (Hold). The company’s favorable rank, when combined with a positive ESP, increases the possibility of an earnings beat.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Factors to Consider
CONSOL Energy operated 68 wells during the fourth quarter of 2018, which is anticipated to boost the total production. The company narrowed its 2018 production guidance to 497.5-507.5 billion cubic feet equivalent (Bcfe) from previous guided range of 490-515 Bcfe, while maintaining the midpoint at 502.5 Bcfe.
The company is lowering outstanding debts, which are likely to lower interest expenses annually by $18 million, thereby boosting its margins. The ongoing share repurchases by the company and resultant drop in shares outstanding are anticipated to have a positive impact on earnings.
The Zacks Consensus Estimate for sales price of gas for the fourth quarter is pegged at $2.50 per thousand cubic feet, which reflects a year-over-year decline of 10.7%. The fall in production and realized price can adversely impact revenues of CONSOL Energy.
Other Stocks With Favorable Combination
One can consider a few other companies from the same industry that also have the right combination of elements to post an earnings beat in their upcoming quarterly release.
Cheniere Energy, Inc. LNG has an Earnings ESP of +44.44% and a Zacks Rank #3. It is expected to report fourth-quarter 2018 earnings on Feb 26. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chesapeake Energy Corporation CHK has an Earnings ESP of +5.88% and a Zacks Rank #3. It is slated to report fourth-quarter earnings on Feb 27.
Goodrich Petroleum Corporation GDP has an Earnings ESP of +20.00% and a Zacks Rank #3. It is expected to report fourth-quarter earnings on Mar 5.
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