U.S. energy giant
) is set to release its second-quarter 2014 results before the
opening bell on Friday, Aug 1.
In the preceding three-month period, Chevron delivered a
negative 6.7% earnings surprise - the fourth successive quarterly
underperformance - as production and
fell. Let's see how things are shaping up for this
Factors to Consider This Quarter
In its interim update earlier this month, the second-largest
U.S. oil company by market value after Exxon Mobil Corp. (
) cautioned about a decline in its international output. This was
attributed to shutdown of the Angola LNG facility and planned
turnaround activity in Kazakhstan.
As it is, due to its integrated nature, Chevron is particularly
susceptible to downside risk from any weakness in the global
economy. We are also concerned by the company's high level of
capital spending, which may result in reduced returns going
Lastly, foreign exchange losses are expected to widen from the
Our proven model does not conclusively show that Chevron 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 $2.67, while
the Zacks Consensus is higher at $2.68. This results in an ESP of
Zacks Rank #3 (Hold):
Chevron 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 momentum.
Stocks to Consider
While earnings beat looks uncertain for Chevron, 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:
Mid-Con Energy Partners L.P. (
) has an Earnings ESP of +8.89% and holds a Zacks Rank #2
Cimarex Energy Co. (
) has an Earnings ESP of +0.58% and holds a Zacks Rank #2.
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CHEVRON CORP (CVX): Free Stock Analysis Report
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