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What's in Store for Continental Resources (CLR) Q2 Earnings?

Zacks Equity Research

Continental Resources, Inc. CLR is scheduled to report second-quarter 2019 results on Aug 5, after the closing bell.

In the last reported quarter, the upstream energy company’s earnings of 58 cents per share beat the Zacks Consensus Estimate of 47 cents, aided by higher production from the North Dakota Bakken, as well as SCOOP and STACK regions. Continental Resources beat estimates thrice in the trailing four quarters, delivering average positive earnings surprise of 7.6%.

Continental Resources, Inc. Price and EPS Surprise

Continental Resources, Inc. Price and EPS Surprise

Continental Resources, Inc. price-eps-surprise | Continental Resources, Inc. Quote

Let’s see how things are shaping 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 are thinking about the company before the earnings release.

The Zacks Consensus Estimate for second-quarter earnings per share (EPS) of 61 cents has witnessed one upward revision and 12 downward revisions by firms in the past 30 days. This estimate is indicative of a 16.4% decline from the year-ago reported earnings of 73 cents per share.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.2 billion, suggesting an improvement of 3.4% from the year-ago reported figure.

Factors at Play

Being primarily involved in the exploration and production of oil and natural gas, Continental Resources’ earnings and revenues are directly related to commodity prices. The Zacks Consensus Estimate for the company’s second-quarter 2019 realized crude prices is pegged at $57 per barrel, indicating a decline from $63 in the year-ago period. Moreover, average natural gas prices in the second quarter are estimated to be $2.30 per thousand cubic feet (Mcf), suggesting a decline from the year-ago level of $2.65. The year-over-year decline in crude price may hurt the company’s upstream businesses, as Continental Resources has an oil-heavy portfolio.

The Zacks Consensus Estimate for the company’s second-quarter 2019 overall production is pegged at 332 thousand barrels of oil equivalent per day (MBoe/d), implying an improvement from the year-ago level of 284 MBoe/d. Moreover, the Zacks Consensus Estimate for crude oil production for the to-be-reported quarter is pegged at 196 thousand barrels per day (MBbls/d), pointing to growth from 157 MBbls/d in the year-ago quarter.

While the lower commodity price realizations will affect its second-quarter results, the increase in production is expected to partially offset the negatives. As such, we expect second-quarter 2019 EPS to decline 16.4% from the year-ago reported figure.

Earnings Whispers

Our proven model does not predict a beat for Continental Resourcesthis earnings season. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to surpass estimates. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is -3.97%. This is because the Most Accurate Estimate of 59 cents is pegged lower than the Zacks Consensus Estimate of 61 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: Continental Resources currently carries a Zacks Rank #3. Though a Zacks Rank of 3 increases the predictive power of ESP, a -3.97% ESP makes surprise prediction difficult.

Meanwhile, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.   

Energy Stocks With Favorable Combination

Here are some companies from the energy sector, which according to our model have the right combination of elements to post an earnings beat in the quarter to be reported.

TransCanada Corporation TRP is set to report second-quarter 2019 earnings on Aug 1. The stock has an Earnings ESP of +0.98% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Callon Petroleum Company CPE has an Earnings ESP of +0.84% and is a #3 Ranked player. The company is slated to release second-quarter 2019 earnings on Aug 6.

Carrizo Oil & Gas, Inc. CRZO is set to report second-quarter 2019 earnings on Aug 5. The stock has an Earnings ESP of +1.10% and a Zacks Rank #3.

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