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Range Resources (RRC) Down 11.2% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
Wintrust (WTFC) delivered earnings and revenue surprises of -16.36% and -0.29%, respectively, for the quarter ended June 2019. Do the numbers hold clues to what lies ahead for the stock?

It has been about a month since the last earnings report for Range Resources (RRC). Shares have lost about 11.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Range Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Range Resources Beats Q1 Earnings Estimates, 2019 Capex to Fall

Range Resources Corporation delivered first-quarter 2019 adjusted earnings of 36 cents per share that surpassed the Zacks Consensus Estimate of 24 cents. The company generated earnings of 46 cents in the year-ago quarter.

In the quarter under review, total revenues amounted to $748.1 million, which surpassed the Zacks Consensus Estimate of $726 million. The top line improved nearly 1% from $742.6 million in the prior-year quarter.

The quarterly results were driven by higher production and increased natural gas liquids (NGLs) price realizations.

Operational Performance

During the first quarter, the company’s production averaged almost 2,255.9 million cubic feet equivalent per day (MMcfe/d), up from 2,188.4 MMcfe/d in the prior-year quarter. Natural gas contributed 69% to total production, while NGL and oil accounted for the remaining 31%.

Oil production plunged 24% on a year-over-year basis.NGL and natural gas production increased 4% each year over year.

Production in Appalachian totaled 2,027 MMcfe/d, up 12% from the year-ago quarter’s figure.

The company’s total price realization (including the effects of hedges and derivative settlements) averaged $1.94 per thousand cubic feet equivalent (Mcfe), down 17% year over year. NGL prices totaled $11.35 per barrel, up 5% year over year.

Natural gas prices declined 23% on a year-over-year basis and amounted to $1.74 per Mcf. Crude oil prices totaled $49.61 per barrel, down 3% on a year-over-year basis.

Expenses

Total expenses were $741.0 million, up 14% year over year.

Financials

At the end of the quarter, the company had long-term debt of approximately $3,790.6 million with a debt-to-capitalization ratio of 48.3%. The company incurred expenditures worth $210 million in the first quarter.     

Guidance

For the second quarter of 2019, the company estimates production in the range of 2,270-2,280 MMcfe/d. For 2019, production is projected in the range of 2,325-2,345 MMcfe/d. Consequently, annual output is expected to rise 5.6-6.5%.

The upstream energy player projects 2019 capital budget at $756 million, which suggests a decline from $910 million in 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 19.45% due to these changes.

VGM Scores

At this time, Range Resources has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Range Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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