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Can Range Resources (RRC) Deliver a Beat in Q1 Earnings?

Zacks Equity Research

We expect Range Resources Corporation RRC to beat expectations when it reports first-quarter 2019 results after the closing bell on Apr 22.

In the preceding three-month period, the company delivered a positive earnings surprise of 16.7% on the back of higher price realizations. On a further encouraging note, the company delivered average positive earnings surprise of 40.3% in the trailing four quarters.

Range Resources Corporation Price and EPS Surprise

Range Resources Corporation Price and EPS Surprise | Range Resources Corporation Quote

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

Earnings Whispers

Our proven model shows that Range Resources is likely to beat earnings estimates because it has the right combination of two key ingredients.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, stands at +5.53%. This is a very meaningful and leading indicator of a likely positive earnings surprise for shares. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Range Resources currently carries a Zacks Rank #3 (Hold), which when combined with +5.53% ESP makes us confident about an earnings beat.

Note that stocks with a Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

You can see the complete list of today’s Zacks #1 Rank stocks here

Which Way are Estimates Treading?

Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts expect from the company this earnings season.

The Zacks Consensus Estimate for first-quarter earnings of 23 cents has witnessed three upward revisions by firms in the past 60 days. This reflects an improvement from 21 cents in the last reported quarter.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $710.6 million.

Factors at Play

During the first quarter, the Henry Hub natural gas price in January, February and March averaged $3.11, $2.69 and $2.95 per million British thermal units, respectively. In comparison, the year-ago quarter’s natural gas price in the respective months averaged $3.87, $2.67 and $2.69. With almost 70% of the company’s production being natural gas, the Fort Worth, TX-based exploration and production company is poised to benefit from higher commodity prices in the second and third months of the quarter.

First-quarter 2019 production is expected to be 2,225 million cubic feet equivalent per day (MMcfe/d), higher than the year-ago output of 2,188.4 MMcfe/d.

Notably, Range Resources’ diversified asset portfolio is spread between low-risk and long reserve-life Appalachian assets, and large-volume/rapid-payout Gulf Coast properties. Given its dominant position in the Marcellus Shale play and continuous endeavor to control costs, we believe that Range Resources will be able report strong profits in the upcoming earnings report.

To summarize, its strong operations are expected to result in higher output than the year-ago period. Higher commodity prices and effective cost-controlling efforts, coupled with soaring output can result in surging profits in the to-be-reported quarter.

Other Energy Stocks With Favorable Combination

Here are some other companies from the same sector, which according to our model have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

Houston, TX-based ConocoPhillips COP has a Zacks Rank #1 and an Earnings ESP of +9.67%. The company is scheduled to report first-quarter earnings on Apr 30.

Denver, CO-based Antero Resources Corporation AR has a Zacks Rank #1 and an Earnings ESP of +3.57%. The company is slated to report quarterly earnings on May 1.

Houston, TX-based Callon Petroleum Company CPE has a Zacks Rank #3 and an Earnings ESP of +2.07%. The company is set to report first-quarter earnings on May 6.

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Range Resources Corporation (RRC) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
Callon Petroleum Company (CPE) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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