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ConocoPhillips’ COP stock appears to be a solid bet now, based on strong fundamentals and compelling business prospects. The company’s shares have popped 69.3% over the past six months.
Headquartered in Houston, TX, ConocoPhillips is primarily involved in the exploration and production of oil, as well as natural gas. In terms of proved reserves and production, the company is one of the largest explorers and producers in the world. It has a strong presence across conventional and unconventional plays in 15 countries. ConocoPhillips’ low risk and cost-effective operations are spread across North America, Asia, Australia and Europe.
The upstream energy company currently carries a Zacks Rank #2 (Buy), which implies that it is offering significant investment opportunities to investors.
Let's see what makes ConocoPhillips’ stock an attractive investment option at the moment.
Earnings estimate revisions have the greatest impact on stock prices. Over the past two months, the Zacks Consensus Estimate for ConocoPhillips’ earnings for the current quarter has improved 142.9%. During this time period, the stock has witnessed four upward revisions and one downward movement.
Moreover, the Zacks Consensus Estimate of revenues for the current quarter is pegged at $6.8 billion, signaling a 42.1% year-over-year rise.
Positive Earnings Surprise History
ConocoPhillips outpaced the Zacks Consensus Estimate in two of the trailing four quarters. It delivered a four-quarter average earnings surprise of 13.6%.
ConocoPhillips Price and EPS Surprise
ConocoPhillips price-eps-surprise | ConocoPhillips Quote
ConocoPhillips holds bulk of acres in the three big unconventional plays, namely Eagle Ford shale, Delaware basin and Bakken shale in the Lower 48, which are rich in oil. In 2021, the company intends to spend a total of $5.5 billion capital, of which $3.1 billion will be directed toward Lower 48. The move will likely boost profitable production from the region.
ConocoPhillips successfully acquired Concho Resources in an all-stock transaction, which was one of the largest oil accords in the United States, amid the coronavirus pandemic. The move boosted ConocoPhillips’ Permian Basin footprint. The combined company was estimated to have a resource base of 23 billion barrels of oil equivalent (Boe).
Importantly, by 2022, the combined firm is expected to save cost and capital of $500 million per annum. Also, it boasts an average cost of supply below $30 per barrel in the WTI price index. Notably, 2021 production estimated to be 1.5 million Boe/d.
Strong Balance Sheet
As of Dec 31, 2020, the oil giant had $2,991 million in total cash and cash equivalents, up from the third-quarter level of $2,490 million. The company had a total long-term debt of $14,750 million, down sequentially from $14,905 million. Importantly, its massive liquidity position will enable it to pay off short-term debt of only $619 million. The company had a debt to capitalization of 34%, lower than the industry average of 44%. Therefore, ConocoPhillips’ balance sheet is significantly less leveraged than the industry it belongs to, providing it with ample financial flexibility.
Systematic & Strategic Plan of Action
The company has boosted quarterly dividend payments as a shareholder-friendly measure. Importantly, following a five-month hiatus, it resumed share repurchase of $1 billion in fourth-quarter 2020. ConocoPhillips will use the cash available on the balance sheet to fund stock buybacks. Earlier, it slowed down the pace of the 2020 stock buy-back program due to market uncertainties.
Other Stocks to Consider
Other top-ranked players in the energy space include Berry Corporation BRY, EOG Resources, Inc. EOG and Pembina Pipeline Corporation PBA, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Berry’s bottom-line estimates for 2021 have witnessed three upward revisions and no downward movement in the past 60 days.
EOG Resources’ bottom line for 2021 is expected to increase 205.5% year over year.
Pembina Pipeline’s bottom line for 2021 is expected to increase 29.3% year over year.
Zacks Names “Single Best Pick to Double”
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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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ConocoPhillips (COP) : Free Stock Analysis Report
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