U.S. energy firm
) is set to release its first quarter 2014 results before the
opening bell on Thursday, May 8.
In the preceding three-month period, Apache delivered a
negative 13.3% earnings surprise - the third underperformance in
the last 4 quarters - as asset sales reduced production. Let's
see how things are shaping up for this announcement.
Factors to Consider This Quarter
A decline in volume levels is a major concern for Apache, as
evident from last year's statistics. The output of oil and
natural gas averaged 760,775 oil-equivalent barrels per day in
2013, down approximately 2.3% year over year. We expect the
declining trend to continue for the to-be-reported quarter as
As it is, Apache's results are directly exposed to oil and gas
prices, which are inherently volatile and subject to complex
market forces. Realized prices could differ significantly from
our estimates, thereby affecting the company's revenues, earnings
and cash flow.
In fact, the Zacks Consensus Estimate for the first quarter
has moved down by 4 cents to a profit of $1.63 per share over the
last 30 days as the tendency for a downward estimate revision was
Our proven model does not conclusively show that Apache is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for
this to happen. Unfortunately, this is not the case here as
Negative Zacks ESP:
This is because the Most Accurate estimate stands at $1.62, while
the Zacks Consensus is higher at $1.63. This results in an ESP of
Zacks Rank #3 (Hold):
Apache carries a Zacks Rank #3 (Hold), which when combined with a
negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revisions
Stocks to Consider
While earnings beat looks uncertain for Apache, here are some
energy firms you may want to consider on the basis of our model,
which shows that they have the right combination of elements to
post an earnings beat this quarter:
) has an Earnings ESP of +2.70% and holds a Zacks Rank #1 (Strong
Buy). Unit Corp. will report first quarter earnings on May 8.
Canadian Natural Resources Ltd.
) has an Earnings ESP of +9.59% and holds a Zacks Rank #2 (Buy).
Canadian Natural Resources will report first quarter earnings on
Callon Petroleum Co.
) has an Earnings ESP of +25.00% and holds a Zacks Rank #2 (Buy).
Callon Petroleum will report first quarter earnings on May 8.
APACHE CORP (APA): Free Stock Analysis Report
CDN NTRL RSRCS (CNQ): Free Stock Analysis
CALLON PETE-DEL (CPE): Free Stock Analysis
UNIT CORP (UNT): Free Stock Analysis Report
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