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Oil Stocks to Watch for Earnings: HP, CLB, HES, MUR

Zacks Equity Research

As of Jan 25,113 S&P 500 members or 27.6% of the index’s total market capitalization have released Q4 results. The companies posted year-over-year earnings growth of 12.4% on 6.5% higher revenues.

Among the S&P 500 companies that have released results, 67.3% surpassed the Zacks Consensus Estimate for earnings and 58.4% beat the revenue mark. Notably, 43.4% surpassed the Zacks Consensus Estimate for both earnings and revenues.

Among all the Zacks sectors that are included in the elite S&P 500 index, Energy is poised to witness the highest earnings growth. This time, we expect Energy to postthe highest earnings growth of 66.2%.

Excluding Energy, the S&P 500’s earnings growth is likely to slip to 9.1% from 11.2%. In the past few quarters, Energy continued to be the key sector contributing to the index’s earnings growth, per the latest Earnings Trends.

However, the growth trend has decelerated from the first three quarters of 2018. The number of positive surprises is treading below the recently reported quarters. In the fourth quarter, the number of revenue beats has been the lowest since the first quarter of 2017. Despite favorable earnings growth trend, a few headwinds have been witnessed.

The report highlights the decelerating growth witnessed by the companies struggling to beat consensus EPS and revenue estimates. This trend is expected to continue into the upcoming quarters. The estimates for first quarter and 2019 are falling considerably. The growth rate of first quarter is expected to be in the negative.

For the month of October, November and December of 2018, average West Texas Intermediate (WTI) crude prices were recorded at $70.75 per barrel, $56.96 and $49.52, respectively, per a data from the U.S. Energy Information Administration (EIA). The figures are considerably higher than the respective prices of $51.58, $56.64 and $57.88 a year ago.

The fate of most energy players is linked to the price of oil. Upstream energy players like explorers and producers as well as oilfield services players generally gain from a rally in crude price.

Stocks to Watch

We have highlighted four energy players that are expected to report results on Jan 30 and Jan 31.

Helmerich & Payne, Inc HP is expected to report first-quarter 2019 results, before the opening bell on Jan 30. It is engaged in the contract drilling of oil and gas wells in the United States and internationally.

In the last reported quarter, this upstream player’s earnings of 19 cents beat the Zacks Consensus Estimate of 18 cents. The upside can be attributed to better-than-expected performance from the U.S. Land business, backed by higher rig margins and revenues. The company beat estimates in one of the last four quarters and reported an average negative earnings surprise of 10.52%.

According to our quantitative model, a company should have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase odds of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions

Our proven model does not show that Helmerich & Payne will beat estimates in the upcoming quarterly results. The company has an Earnings ESP of 6.01% and carries a Zacks Rank #4. You can see the complete list of today’s Zacks #1 Rank stocks here.
 

Helmerich & Payne, Inc. Price and EPS Surprise

 

Helmerich & Payne, Inc. Price and EPS Surprise | Helmerich & Payne, Inc. Quote

Core Laboratories N.V. CLB is expected to report fourth-quarter 2018 results, after the closing bell on Jan 31. It is an oilfield services company that provides reservoir management and production enhancement services to the oil and gas industry on a global basis.

In the last reported quarter, the company’s earnings of 64 cents beat the Zacks Consensus Estimate of 63 cents. The results were driven by improved performance in the Production Enhancement segment.

The company beat estimates in all of the last four quarters and delivered average positive earnings surprise of 0.40%. Our proven model does not show that Core Laboratories will beat estimates in the upcoming quarterly results. The company has an Earnings ESP of -2.70% and carries a Zacks Rank #5.
 

Core Laboratories N.V. Price and EPS Surprise

 

Core Laboratories N.V. Price and EPS Surprise | Core Laboratories N.V. Quote

Hess Corporation HES is expected to report fourth-quarter 2018 results, before the opening bell on Jan 30. It is a global integrated energy company.

In the last reported quarter, the company posted earnings of 38 cents, against the Zacks Consensus Estimate of a loss of 5 cents. Higher realized oil and natural gas prices along with plunge in operating expenses boosted the results.

The company beat estimates in three of the last four quarters and delivered an average positive earnings surprise of 230.48%. Our proven model does not show that Hess will beat estimates in the upcoming quarterly results. The company has an Earnings ESP of -6.86% and carries a Zacks Rank #3. (Read more: Hess to Report Q4 Earnings: What's in the Offing?)
 

Hess Corporation Price and EPS Surprise

 

Hess Corporation Price and EPS Surprise | Hess Corporation Quote

Murphy Oil Corporation MUR is expected to report fourth-quarter 2018 results on Jan 31. It is a global oil and gas exploration and production company.

In the last reported quarter, the company’s earnings of 35 cents missed the Zacks Consensus Estimate of 36 cents. Higher costs led to the downslide.

The company beat estimates in three of the last four quarters and delivered an average positive earnings surprise of 76.16%. Our proven model does not show that Murphy Oil will beat estimates in the upcoming quarterly results. The company has an Earnings ESP of 0.00% and carries a Zacks Rank #4. (Read more: Murphy Oil to Report Q4 Earnings: What's in the Cards?)
 

Murphy Oil Corporation Price and EPS Surprise

 

Murphy Oil Corporation Price and EPS Surprise | Murphy Oil Corporation Quote

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