Energy downstream operator
Western Refining Inc.
) is set to release its first quarter 2014 results before the
opening bell on Tuesday, May 6.
In the preceding three-month period, Western Refining
delivered a positive 1.69% earnings surprise - the second
outperformance in the last 3 quarters - buoyed by a rise in
throughput volumes. Let's see how things are shaping up for this
Factors to Consider This Quarter
In particular, narrowing crack spreads - the conventional
measure of refining income - is expected to weigh on Western
Refining's profitability and valuation. Moreover, with refiners
being buyers of crude, an increase in
can squeeze their profitability. As a result, with the
commodity's price having hovered around $100 per barrel for most
of the first quarter, we expect Western Refining'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.
In fact, the Zacks Consensus Estimate for the first quarter
has moved down by 13 cents to a profit of 41 cents per share over
the last 30 days as the tendency for a downward estimate revision
was more obvious.
Our proven model does not conclusively show that Western
Refining 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
Western Refining's earnings ESP is 0.00%, as the Most Accurate
estimate and the Zacks Consensus Estimate both stand at 41
Western Refining carries a Zacks Rank #3 (Hold), which when
combined with a 0.00% 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 Western Refining, 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.
Athlon Energy Inc.
) has an Earnings ESP of +3.70% and holds a Zacks Rank #2 (Buy).
Athlon Energy will report first quarter earnings on May 6.
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.
ATHLON ENERGY (ATHL): Free Stock Analysis
CALLON PETE-DEL (CPE): Free Stock Analysis
UNIT CORP (UNT): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis
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