On Aug 28, Zacks Investment Research downgraded Canadian
Talisman Energy Inc.
) to a Zacks Rank #4 (Sell).
Why the Downgrade?
Talisman witnessed sharp downward estimate revisions after
reporting a disappointing second-quarter 2013 result. In fact,
Talisman delivered negative earnings surprises in each of the
last 7 quarters with an average miss of 131.6%.
Last month, Talisman reported second-quarter 2013 loss per share
of 3 cents against the Zacks Consensus Estimate of earnings of 4
cents and the year-ago earnings of 7 cents per share. The loss
was mainly due to decreased production along with lower oil and
liquids price realizations.
Talisman's quarterly oil and liquids volumes were down by a
substantial 34.6% year over year to 98,959 barrels per day
(Bbl/d), owing to significantly lower production in the North
Sea. Moreover, due to decreased production in North America and
North Sea, Talisman's natural gas volumes were down 14.4% to
1,369 million cubic feet per day (MMcf/d), as compared to 1,599
MMcf/d in the year-ago period.
Also, cash flow from continuing operations during the quarter
totaled $526.0 million, down 34.5% from the second quarter of
Lastly, Talisman depends on property acquisitions to expand its
resource base. The company may find it difficult to complete
accretive transactions in the future, which could negatively
impact its growth rate.
As a result of these bearish factors, the tendency for a downward
estimate revision has been more obvious in recent times. In fact,
the Zacks Consensus Estimate for third-quarter 2013 decreased
14.3% to 6 cents per share over the last 30 days. For 2013, more
than half of the estimates (6 out of 10 estimates) were revised
downward over same time frame, bringing down the Zacks Consensus
Estimate by a whopping 61.1% to 7 cents per share.
Stocks to Consider
Not all energy stocks are performing as poorly as Talisman. In
the exploration and production sector, firms like
ARC Resources Ltd
Crescent Point Energy Corp.
Canadian Oil Sands Limited
) are worth considering. All the stocks sport a Zacks Rank #2
ARC RESOURCES (AETUF): Get Free Report
CDN OIL SANDS (COSWF): Get Free Report
CRESCENT PT EGY (CSCTF): Get Free Report
TALISMAN ENERGY (TLM): Free Stock Analysis
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