) is scheduled to report its first-quarter 2013 results on May 1,
after the closing bell.
In the fourth quarter of 2012, Tesoro delivered a -2.90%
earnings surprise, due to an increase in operating, depreciation
and amortization expenses. Let's see how things are shaping up
prior to this announcement.
Factors to Consider This Quarter
In our view, Tesoro's lack of exposure to the other refining
regions in the country weakens its competitive position. The
company's West Coast centric operations and heavy dependence on
the weak Californian market act as major liabilities.
Additionally, with refiners being buyers of crude, an increase
in oil prices can squeeze their profitability. As a result, with
the commodity's price hovering around $90-95 per barrel during
the first quarter, we expect Tesoro's margins to be negatively
impacted due to a rise in the cost of oil it buys to make gas,
jet fuel and other refined products.
Our proven model does not conclusively show that Tesoro 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 71 cents
while the Zacks Consensus Estimate is higher at 74 cents. This
results in a difference of
Zacks Rank #3 (Hold):
However, Tesoro's Zacks Rank #3 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 a negative estimate revisions momentum.
Stocks to Consider
Here are some energy companies 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:
Exterran Partners LP
) has an earnings ESP of +4.35% and a Zacks Rank #1 (Strong
) has an earnings ESP of +28.95% and a Zacks Rank #1 (Strong
Delek US Holdings Inc.
) has an earnings ESP of + 0.86% and a Zacks Rank #2 (Buy).
DELEK US HLDGS (DK): Free Stock Analysis
EXTERRAN PTNRS (EXLP): Free Stock Analysis
SEMGROUP CORP-A (SEMG): Free Stock Analysis
TESORO CORP (TSO): Free Stock Analysis Report
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