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Anadarko Petroleum (APC): Stock to Beat in Q4 Earnings

We expect Anadarko Petroleum CorporationAPC to beat expectations when it reports fourth-quarter 2016 results after the market closes on Jan 31. Last quarter, this oil and natural gas exploration and production company reported a negative earnings surprise of 56.14%. However, the company has registered an average positive surprise of 4.38% in four trailing quarters.

Why a Likely Positive Surprise

Our proven model shows that Anadarko Petroleum is likely to beat estimates because it has the right combination of two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates and Anadarko Petroleum has the right mix.

Anadarko Petroleum Corporation Price and EPS Surprise

Anadarko Petroleum Corporation Price and EPS Surprise | Anadarko Petroleum Corporation Quote

Zacks ESP : The Earnings ESP, which represents the difference between the Most Accurate estimate of a loss of 47 cents and the Zacks Consensus Estimate of a loss of 51 cents, is +7.84%. This is a meaningful and leading indicator of a likely positive surprise.

Zacks Rank : Anadarko Petroleum currently carries a Zacks Rank #2. The combination of its favorable Zacks Rank and positive ESP makes us reasonably confident of a positive surprise this season.

Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors to Consider

Anadarko Petroleum raised its divestiture adjusted total sales volume guidance by 8 million barrels of oil equivalents (MMBOE) to 262-264 MMBOE. Additional rigs in the Delaware and DJ Basins are expected to boost production.

Amid the decline in commodity prices, the company is focused on improving its cost structure. Thanks to this initiative, Anadarko Petroleum is expected to lower its expenses by $800 million per annum.

Anadarko Petroleum monetized a portion its non-core assets in 2016 and utilized the proceeds to lower the debt level and make strategic acquisitions, which will boost the performance of the company, going forward.

Price Movement

Over the last three months, Anadarko Petroleum has outperformed the Zacks categorized Oil & Gas - Exploration and Production - U.S. industry. During this period, company's shares gained 15.8%, compared with the industry's return of 6.9%.

Other Stocks to Consider

Anadarko Petroleum is not the only company in this industry looking up this earnings season. We see likely earnings beats coming from these companies as well:

EQT Corporation EQT is expected to release fourth-quarter 2016 results on Feb 2, before the market opens. The company has an Earnings ESP of +22.22% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here

Laredo Petroleum Inc. LPI has an Earnings ESP of +6.25% and a Zacks Rank #2. The company is expected to release fourth-quarter 2016 results on Feb 15, after the market closes.

W&T Offshore Inc. WTI has an Earnings ESP of +66.67% and a Zacks Rank #2. The company is expected to release fourth-quarter 2016 results on Mar 14.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

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EQT Corporation (EQT): Free Stock Analysis Report

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Laredo Petroleum, Inc. (LPI): 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.


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

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