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Hess (HES) Gears Up for Q2 Earnings: What's in the Cards?

Zacks Equity Research

Hess Corporation HES is set to release second-quarter 2019 results on Jul 31.

In the last reported quarter, the company reported earnings of 9 cents per share against the Zacks Consensus Estimate of a loss of 26 cents. For the trailing four quarters, the company has a positive earnings surprise of 263.1%, without a miss in any quarter.

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts expect from the company’s upcoming earnings release.

The Zacks Consensus Estimate of a loss of 6 cents for the second quarter has seen one upward and five downward revisions by firms in the past 30 days. Despite downward revision by most of the firms, the company is likely to see year-over-year improvement in the bottom line of 73.9%.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.6 billion, suggesting an improvement of 2.1% from the year-ago reported figure.

Factors at Play

The Zacks Consensus Estimate for second-quarter total production is pegged at 288 thousand barrels of oil equivalents per day (MBoe/d), implying a rise from the year-ago reported figure of 265 Mboe/d.

The Zacks Consensus Estimate for worldwide average crude oil prices (including hedging) is $60 per barrel, indicating a decline from $62.65 reported in the year-ago quarter.

Moreover, worldwide average natural gas liquids prices (including hedges) are expected to be $13.10 per barrel, calling for a decline from the year-ago figure of $20.51. Further, the Zacks Consensus Estimate for worldwide average natural gas prices (including hedging) is $3.77 per thousand cubic feet (Mcf), reflecting a fall from $4.12 a year ago.  

Although an increase in total production is expected to boost the explorer’s results in the second quarter, declining worldwide average selling prices of crude oil, natural gas liquids and natural gas might partially dampen growth.

What Our Model Unveils

Our proven model does not conclusively show a beat for Hess this earnings season. This is because 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. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Hess has an Earnings ESP of -118.67% as the Most Accurate Estimate of a loss of 14 cents per share is wider than the Zacks Consensus Estimate of a loss of 6 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hess currently carries a Zacks Rank #3. Though a Zacks Rank of 3 increases the predictive power of ESP, a negative ESP makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Hess Corporation Price and EPS Surprise

 

Hess Corporation Price and EPS Surprise

Hess Corporation price-eps-surprise | Hess Corporation Quote

Energy Stocks With Favorable Combination

Here are a few companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Williams Companies WMB has an Earnings ESP of +3.60% and a Zacks Rank of 3. The firm is expected to release earnings on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encana Corporation ECA has an Earnings ESP of +5.56% and is Zacks #3 Ranked. The company is anticipated to release earnings on Jul 31.

Independence Contract Drilling, Inc. ICD has an Earnings ESP of +18.18% and a Zacks Rank #3. The company is anticipated to release earnings on Aug 1.

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