We expect global oil and gas exploration and production
Murphy Oil Corporation
) to beat expectations when it reports fourth-quarter 2012
results on Jan 30, 2013.
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Why a Likely Positive Surprise?
Our proven model shows that Murphy Oil is likely to beat earnings
because it has the right combination of two key factors.
Positive Zacks ESP:
Earnings Surprise Prediction or ESP (Read:
Zacks Earnings ESP: A Better Method
), which represents the difference between the Most Accurate
estimate and the Zacks Consensus Estimate, is at 3.05%. This is
very meaningful and a leading indicator of a likely positive
earnings surprise for shares.
Zacks #3 Rank (Hold):
We note that stocks with Zacks Ranks of #1, #2 and #3 have a
significantly higher chance of beating earnings. The Sell-rated
stocks (#4 and #5) should never be considered going into an
The combination of Murphy Oil's Zacks Rank #3 (Hold) and 3.05%
ESP makes us very confident in looking for a positive earnings
beat on Jan 30, 2013.
What is Driving the Better Than Expected
Murphy Oil's diversified asset base along with steady capital
investment program and cost-curtailment measures are expected to
lead to a positive earnings surprise in the current quarter.
Sales of UK assets are benefiting Murphy Oil's overall
performance, which in turn prompted the company to follow the
same path in the U.S. The company intends to spin-off its U.S.
downstream subsidiary, Murphy Oil USA, Inc.
The positive trend is seen in the trailing four quarter average
surprise of 0.68%. The company's third-quarter 2012 surprise was
-2.50% due to weaker U.S. retail marketing margins, lower North
American natural gas sales prices, and an after tax loss from
foreign exchange transactions.
Other Stocks to Consider
Murphy Oil is not the only company looking up this earnings
season. We also see likely earnings beat coming from other
operators in the industry.
TransAtlantic Petroleum Ltd.
), Earnings ESP of +100.00% and Zacks Rank #2 (Buy)
), Earnings ESP of +0.71% and Zacks Rank #3 (Hold)
Occidental Petroleum Corporation
), Earnings ESP of +0.60% and Zacks Rank #3 (Hold)