Plains Exploration & Production Company
) is set to report its fourth-quarter results on Feb 21, 2013.
Last quarter, the company's reported earnings were in line with
the Zacks Consensus Estimate. Let's see how things are shaping up
prior to this announcement.
Factors to Consider This Quarter
The year 2012 was volatile for the oil industry as the oil
companies continued to face challenges from the rising
utilization of alternate energy for power generation, higher
competition from natural gas producers, production curtailment in
the manufacturing sector and compliance with rising government
rules, which increased operating costs. Like other oil producers,
Plains Exploration & Production is experiencing a similar
Plains Exploration & Production manages its commodity price
risk by hedging production. This may, however, prevent the
company from realizing maximum prices if the market price rises
above the current hedged prices. Derivative contracts also expose
it to financial losses, if there is a delay in production or a
failure on the part of the counterparty to satisfy its
However, we are optimistic about the company's strong balance
sheet and liquidity position, asset rebalancing strategy, and
development of onshore assets in several locations, which may
Our proven model does not conclusively show that Plains
Exploration & Production is likely to beat earnings this
quarter. That is because a stock needs to have both a positive
Expected Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not
the case here as you will see below.
Negative Zacks ESP:
This is because the Most Accurate estimate stands at 53 cents,
while the Zacks Consensus Estimate is pegged at 48 cents. This
comes to a difference of -9.43%.
Zacks Rank #3 (Hold):
Plains Exploration & Production with Zacks Rank #3 (Hold),
enhances the possibility of an earnings surprise. However, the
Zacks Rank #3 when combined with a negative ESP makes surprise
prediction difficult. We also caution against stocks with Zacks
Ranks #4 and 5 (Sell rated stocks) going into the earnings
announcement, especially when the company is experiencing
negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies from the sector you may want to
consider as our model shows that these have the right combination
of elements to post an earnings beat this quarter:
Carrizo Oil & Gas Inc.
) has earnings ESP of +5.71% and Zacks Rank #3 (Hold)
EPL Oil & Gas, Inc.
) has earnings ESP of +25.53% and Zacks Rank #3 (Hold)
EXCO Resources Inc.
) has earnings ESP of +18.75% and Zacks Rank #3 (Hold)
CARRIZO OIL&GAS (CRZO): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
PLAINS EXPL&PRD (PXP): Free Stock Analysis
EXCO RESOURCES (XCO): Free Stock Analysis
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