) is scheduled to report its first-quarter 2013 results on
Thursday, May 9, before the market opens.
In the fourth quarter of 2012, Apache delivered a negative
1.30% earnings surprise due to deteriorating oil and gas
realizations. In fact, Apache hasdelivered negative earnings
surprises in each of the last 4 quarters, with an average miss of
6.73%. Let's see how things are shaping up prior to this
Factors to Consider this Quarter
The operating scenario for exploration and production
(E&P) companies will remain critical in the near-to-medium
term. Apache is also susceptible to oil and gas prices, which are
inherently volatile and subject to complex market forces.
Apache's long-term production and reserve growth primarily
depend on its acquire-and-exploit model. Apache may find it
difficult to complete accretive transactions in the future, which
could negatively impact its growth rate.
Additionally, operations in the Gulf of Mexico remain prone to
various natural calamities such as hurricanes and also face the
risk of pipeline damages and oilfield service cost inflation.
Lower-than-expected production from the region will likely impact
Apache's overall performance.
Moreover, the Zacks Consensus Estimate for the first quarter
moved down by 4 cents to $2.20 per share over the last 30 days as
the tendency for a downward revision was more obvious.
Our proven model does not conclusively show that Apache is
likely to beat the Zacks Consensus Estimate in the first quarter.
That is because a stock needs to have both a positive earnings
Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1 (Strong Buy) or at least 2 (Buy) or 3
(Hold) for this to happen. But this is not the case here as
Negative Zacks ESP:
This is because the Most Accurate estimate stands at $2.18 while
the Zacks Consensus Estimate is higher at $2.20. This results in
a difference of -0.91%.
Zacks Rank #3 (Hold):
Apache's Zacks Rank #3, however, increases the forecasting power
of ESP. That said we also need to have a positive ESP to be
confident of an earnings surprise call.
We caution against stocks with Zacks Rank #4 and 5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some E&P firms you might want to consider on the
basis of our model. These have the right combination of elements
to post an earnings beat this quarter:
Memorial Production Partners LP
) has an earnings ESP of +10.64% and a Zacks Rank #3 (Hold).
EV Energy Partners LP
) has an earnings ESP of +10.0% and a Zacks Rank #3 (Hold).
Atlas Resource Partners LP
) has an earnings ESP of +8.70% and Zacks Rank #3 (Hold).
APACHE CORP (APA): Free Stock Analysis Report
ATLAS RES PTNRS (ARP): Free Stock Analysis
EV ENERGY PTNR (EVEP): Free Stock Analysis
MEMORIAL PRODUC (MEMP): Free Stock Analysis
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