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Energy XXI (EXXI): What to Expect in Q3 Earnings? - Analyst Blog


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Domestic oil and gas explorer Energy XXI Ltd. EXXI is set to release its fiscal 2015 third-quarter results on Thursday, May 7.

In the last reported quarter, the company failed to meet the Zacks Consensus Estimate by 6 cents. In fact, Energy XXI has failed to meet estimates in three of the trailing four quarters with an average negative surprise of 76.49%.

Let's see how things are shaping up for this announcement.

Factors to Consider This Quarter

Being a firm in the oil and gas exploration and production industry, Energy XXI's revenues, earnings and cash flows are expected to be hampered by low commodity prices. Crude oil prices have fallen over 50% since June last year and natural gas prices have also remained weak.

Though third-quarter production is expected to see a sequential increase (as anticipated by the company last quarter), Energy XXI has lowered full-year production guidance. With pricing remaining weak, lower production volumes can significantly hamper earnings.

Also, over the past 60 days, a majority of the brokerage firms have lowered current quarter as well as current year estimates, an indication of further bearishness ahead. Currently, the third-quarter estimate is pegged at a loss of $1.07 compared with earnings of 19 cents reported in the year-ago quarter.

Earnings Whispers

Our proven model does not conclusively show that Energy XXI is likely to beat earnings this quarter. That's because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. Both the Most Accurate estimate and the Zacks Consensus Estimate for Energy XXI are pegged at a loss of $1.06.

Zacks Rank: Energy XXI carries a Zacks Rank #5 (Strong Sell), which complicates the forecasting power of ESP.

As it is, we caution against Sell-rated stocks with (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

While earnings beat looks uncertain for Energy XXI, here are some 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:

Rose Rock Midstream, L.P. RRMS has an Earnings ESP of +13.73% and has a Zacks Rank #2 (Buy). The company is expected to release earnings on May 7.

TC PipeLines, LP TCP has an Earnings ESP of +10.67% and holds a Zacks Rank #2. The company is expected to release earnings on May 7.

Callon Petroleum Company CPE has an Earnings ESP of +50.00% and holds a Zacks Rank #3 (Hold). The company is expected to release earnings on May 6.


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CALLON PETE-DEL (CPE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: TCP , CPE




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