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Why We Expect Crestwood (CEQP) to Deliver Q2 Earnings Beat

·3 min read

Crestwood Equity Partners LP CEQP is set to beat earnings estimates when it reports second-quarter 2021 results on Jul 27, before the opening bell.

In the last reported quarter, the partnership announced adjusted loss per unit of 86 cents versus the Zacks Consensus Estimate of earnings of 37 cents due to lower gathering, processing and compression volumes. Moreover, decreased COLT Hub rail loading volumes added to the negatives. These were partially offset by increased natural gas liquids volumes sold or processed.

In all the trailing four quarters, Crestwood’s earnings missed the Zacks Consensus Estimate. This is depicted in the graph below:

Crestwood Equity Partners LP Price and EPS Surprise

Crestwood Equity Partners LP Price and EPS Surprise
Crestwood Equity Partners LP Price and EPS Surprise

Crestwood Equity Partners LP price-eps-surprise | Crestwood Equity Partners LP Quote

However, we expect the trend to change this time around, with the partnership beating second-quarter earnings estimates. Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter earnings per unit of 5 cents has witnessed one upward and no downward revision over the past 30 days. The estimated figure suggests a significant improvement from the prior-year reported loss of 33 cents per unit.

Similarly, the consensus estimate for second-quarter revenues of $834.1 million indicates a 136.5% increase from the year-ago reported figure.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Crestwood this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Earnings ESP for the partnership is currently +680.00%. This is because the Most Accurate Estimate is pegged at 39 cents per unit, significantly higher than the Zacks Consensus Estimate of 5 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Factors Driving the Better-Than-Expected Earnings

Crestwood’s massive storage capacity and diversified portfolio of infrastructure assets are expected to have helped it generate higher profits in the second quarter backed by increased volumes. Significant improvement in oil and natural gas prices in the second quarter from the year-ago period is expected to have resulted in increased shale activity levels. As such, Crestwood — with its extensive network of pipelines that spreads across 1,948 miles, and used for gathering and processing purposes — is expected to have generated higher fees.

The partnership’s footprint in the Barnett Shale, Bakken Shale, Delaware Basin, Marcellus Shale and other regions is expected to have helped it encounter high utilization of storage capacity triggered by increased upstream activities.

Other Stocks to Consider

Here are some other companies from the Energy space that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

EOG Resources, Inc. EOG has an Earnings ESP of +6.50% and a Zacks Rank of 1. It is scheduled to report second-quarter results on Aug 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips COP has an Earnings ESP of +4.34% and is a Zacks #1 Ranked player. The company is scheduled to release second-quarter results on Aug 3.

Continental Resources, Inc. CLR has an Earnings ESP of +14.59% and a Zacks Rank #1. The firm is scheduled to release quarterly earnings on Aug 2.

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ConocoPhillips (COP) : Free Stock Analysis Report

EOG Resources, Inc. (EOG) : Free Stock Analysis Report

Continental Resources, Inc. (CLR) : Free Stock Analysis Report

Crestwood Equity Partners LP (CEQP) : Free Stock Analysis Report

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