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Vermilion (VET) Gears Up for Q3 Earnings: What's in Store?

Zacks Equity Research

Vermilion Energy Inc. VET is set to release third-quarter 2019 results on Oct 31, before the opening bell.

The company beat earnings estimates once in the trailing four quarters, with the average positive surprise being 19.3%.

Vermilion Energy Inc. Price and EPS Surprise

Vermilion Energy Inc. Price and EPS Surprise

Vermilion Energy Inc. price-eps-surprise | Vermilion Energy Inc. Quote

Let’s see how things have shaped 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 for third-quarter earnings of 4 cents has seen no upward movement but two downward revisions by firms in the past 30 days. The figure indicates 89.2% year-over-year plunge.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $299.7 million, suggesting a decline of 23% from the year-ago reported figure.

Factors at Play

Being heavily involved in upstream operations, Vermilion’s earnings and revenues are directly related to commodity prices. Notably, the WTI crude price in third-quarter 2019 was lower than the year-ago period. In July, August and September, WTI averaged $57.35, $54.81 and $56.95 per barrel, respectively, per the U.S. Energy Information Administration.  In comparison, WTI had averaged $70.98, $68.06 and $70.23 per barrel, respectively, in the comparable three months of 2018. Moreover, natural gas prices followed a similar pathway, with lower year-over-year figures.

The year-over-year decline in crude oil and natural prices might have held back the company from unlocking its true potential of earning huge profits from upstream businesses.

Markedly, natural gas production in Ireland for the to-be-reported quarter might have been dented by turnaround activities and natural declines. However, the wave of rising production in the U.S. shale plays might have led to higher third-quarter 2019 output from the company’s Turner Sand play assets in the Powder River Basin.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Vermilion this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 4 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Vermilion currently carries a Zacks Rank #3.

Q2 Earnings Highlight

In the last reported quarter, the company reported earnings per share of 1 cent, significantly missing the Zacks Consensus Estimate of 29 cents and declining from the year-ago quarter’s 18 cents, primarily due to lower production in France.

Energy Stocks With Favorable Combination

While earnings beat looks uncertain for Vermilion, here are some companies from the energy space that you may want to consider on the basis of our model, which shows that these have the right combination of elements to deliver an earnings beat in the upcoming quarterly reports:

PBF Logistics LP PBFX has an Earnings ESP of +4.80% and a Zacks Rank of 2. The company is slated to announce third-quarter 2019 earnings on Oct 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rattler Midstream LP RTLR has an Earnings ESP of +13.76% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Nov 5.

Plains All American Pipeline, L.P. PAA has an Earnings ESP of +5.93% and is a #3 Ranked player. The company is scheduled to release third-quarter 2019 earnings on Nov 5.

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