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Here's Why You Should Invest in Pioneer Natural (PXD) Stock

Zacks Equity Research
Cenovus Energy's (CVE) prospects are impressive, given new growth projects and increasing efficiency. However, balance sheet weakness and other challenges are affecting the stock.

Pioneer Natural Resources Company PXD has witnessed positive earnings estimate revisions for second-quarter 2019 and full-year 2019.

The Zacks Consensus Estimate for the June 2019 quarter’s earnings per share has been revised 15% upward over the past 30 days. Moreover, the Zacks Consensus Estimate for 2019 earnings has moved 11.2% north.

What Makes It an Attractive Pick?

Pure-Play Permian Company

With the divestment of its Eagle Ford resources, the upstream energy company has become a pure-play Permian stock. With sole exposure to the nation’s most prolific basin — comprising a huge inventory of low-cost premium wells — Pioneer Natural looks to extract as much as 1 million barrels of crude oil every day by 2027.

In the first quarter of 2019, this Zacks Rank #2 (Buy) company produced more oil than it estimated. Moreover, the company projects oil production from the basin through 2019 in the band of 203 to 213 thousand barrels of oil per day (MBbls/D), higher than 181 MBbls/D in 2018. To drive production from the year-ago level, the company plans to operate 21 to 23 rigs through 2019.

Favorable Oil Price  

Year to date, there has been a significant recovery in oil prices. Moreover, the price is likely to remain favorable as there has been signs from the OPEC that the cartel may chose to maintain production cuts.

Although the pipeline bottleneck problem in the Permian basin may act as a damper, favorable oil prices along with production growth of the commodity are likely to support Pioneer Natural’s bottom line. This is because crude comprises majority of the company’s total production volumes. Notably, we expect the stock to report 2019 earnings growth of 43.3%.

Capital Efficiency

Pioneer Natural expects capital spending related to drilling, completions and facilities (D, C & F) to decline almost 11% through 2019. Notably, despite its declining capital spending, the company expects its production to go up, reflecting improving efficiency in capital spending.

Returning Capital to Shareholders

In December 2018, the company got an authorization from its board of directors to repurchase $2 billion common stock. As of May 6, Pioneer Natural has managed to repurchase a total of $328 million worth shares.

The upstream energy stock is also returning cash to shareholders through dividend payments. The company recently raised its semi-annual dividend payments by 100% and is also planning to increase dividend further.

Other Prospective Stocks

Other prospective players in the energy space are Enterprise Products Partners LP EPD, Ecopetrol S.A. EC and Anadarko Petroleum Corporation APC. While Enterprise Products carries a Zacks Rank #2, Ecopetrol and Anadarko Petroleum sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.        

Enterprise Products has average positive earnings surprise of 17% for the last four quarters.

Ecopetrol is likely to witness earnings growth of 25.3% through 2019.

Anadarko Petroleum has average positive earnings surprise of 6.6% for the last four quarters.

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Enterprise Products Partners L.P. (EPD) : Free Stock Analysis Report
 
Ecopetrol S.A. (EC) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
Anadarko Petroleum Corporation (APC) : Free Stock Analysis Report
 
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