Why is Noble (NBL) Up 6.8% Since Its Last Earnings Report?

A month has gone by since the last earnings report for Noble Energy Inc. NBL. Shares have added about 6.8% in that time frame.

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

Noble Q1 Earnings & Revenues Beat Estimates, View Up

Noble Energy, Inc. reported adjusted earnings of 35 cents per share in the first quarter of 2018, beating the Zacks Consensus Estimate of 28 cents by 25%.

On a GAAP basis, the company reported earnings of $1.14 per share compared with 8 cents in the year-ago quarter.
 
The difference between adjusted and GAAP figures was caused by the combined effect of gain on divestiture, charges including asset impairment, loss on investment in Tamar Petroleum Ltd., loss on Commodity Derivative Instruments, and income tax adjustments.

Total Revenues

Noble Energy's total revenues increased around 24.1% year over year to $1,286 million in the first quarter. Reported revenues also surpassed the Zacks Consensus Estimate of $1,199 million by 7.3%.

Operational Results

In the quarter under review, sales volume averaged 370 thousand barrels of oil equivalent per day (MBoe/d), exceeding the guided range of 358-368 MBoe/d. Prior to the implementation of ASC 606, total company sales volumes in the first quarter of 2018 were 361 MBoe/d.

U.S. onshore assets are a major contributor to the total sales volume, contributing nearly 246 MBoe/d in the first quarter. Onshore sales volume was up 30% year over year, primarily due to solid contribution from Delaware Basin assets.

Operating expenses in the quarter were $578 million compared with $1,001 million in the year-ago quarter. Operating income was $708 million versus $35 million in the year-ago quarter.

The company announced $750 million of share repurchase program and repurchased nearly $67.5 million shares during the quarter.

Realized Prices

U.S. Onshore realized crude oil and condensate prices (Post ASC 606 adoption) in the quarter increased 25.8% to $61.50 per barrel from the year-ago level of $48.88.

U.S. Onshore Natural gas prices decreased 24.6% to $2.60 per thousand cubic feet from $3.45 in the year-ago period.

U.S. Onshore Realized prices for natural gas liquids were up 6.8% to $25.47 per barrel.

Financial Highlights

Noble Energy's cash and cash equivalents as of Mar 31, 2018 were $992 million, down from $675 million as of Dec 31, 2017.

Long-term debt was $6,858 million as of Mar 31, 2018 compared with $6,746 million as of Dec 31, 2017.

Cash flow from operating activities in the quarter was $583 million, up from $536 million in the prior-year quarter.

Guidance

Noble Energy updated its guidance to reflect the adoption of ASC 606 and the timing of closing the Gulf of Mexico transaction.

Noble Energy’s 2018 sales volume has been increased to the range of 350-360 MBoe/d, up from the prior range of 343-353 MBoe/d. Second-quarter sales volumes are anticipated to be between 340 MBoe/d and 350 MBoe/d.

Noble Energy reiterates its 2018 capital expenditure to be between $2.7 billion and $2.9 billion, with second-quarter expenses to come in within $750-$850 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions higher for the current quarter compared to seven lower.

Noble Energy Inc. Price and Consensus

 

Noble Energy Inc. Price and Consensus | Noble Energy Inc. Quote

VGM Scores

At this time, NBL has a great Growth Score of A, though it is lagging a lot on the momentum front with an F. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

The company's stock is suitable solely for growth based on our styles scores.

Outlook

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

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