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Cenovus Energy (CVE) to Report Q2 Earnings: What's in Store?

Cenovus Energy Inc. CVE is set to report second-quarter 2020 results on Jul 23, before the opening bell.

In the last reported quarter, the leading integrated energy company reported loss per share of 72 cents, wider than the Zacks Consensus Estimate of a loss of 19 cents, owing to lower contributions from oil sands and refining operations. Notably, it missed the consensus estimate in three of the prior four quarters, with the average negative surprise being 130.5%. This is depicted in the graph below:

Cenovus Energy Inc Price and EPS Surprise

Cenovus Energy Inc Price and EPS Surprise

Cenovus Energy Inc price-eps-surprise | Cenovus Energy Inc Quote

Let’s see how things have shaped up prior to this announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter loss per share of 41 cents has witnessed four downward revisions and one upward movement over the past 30 days. The estimated figure suggests a decline of 356.3% from the prior-year reported number.

The consensus estimate for second-quarter revenues of $1.97 billion indicates a 55.6% decline from the year-ago reported figure.

Factors to Consider

Weak crude prices are likely to have hurt Cenovus Energy’s upstream operations in the second quarter. Oil prices mostly traded in the bearish territory, especially in the first two months of the June quarter, on account of low global energy demand owing to the coronavirus outbreak. Thankfully, an improvement in crude prices was seen in the last month since the coronavirus-induced lockdowns were eased and the OPEC+ group managed to curtail significant oil production amid the pandemic.

Total production from continuing operations is expected to have decreased year over year. The consensus estimate for total production is pegged at 409,111 barrels of oil equivalent per day (Boe/d), suggesting a decrease from the year-ago quarter’s 443,318 Boe/d.

Oil and liquids production for the second quarter is pegged at 347,907 barrels per day (Bbls/d), indicating a decline from the year-ago level of 371,390 bbls/d. Natural gas production is pegged at 358 million cubic feet per day (MMcf/d), signaling a decline from 432 MMcf/d in second-quarter 2019. Lower hydrocarbon production and commodity prices are expected to have affected the company’s profit levels in the second quarter.

Earnings Whispers

Our proven model does not indicate an earnings beat for Cenovus Energy this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here as you will see below.

Earnings ESP: The company’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate stand at a loss of 41 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cenovus Energy currently carries a Zacks Rank #3.

Stocks to Consider

Here are some companies from the Energy space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Enbridge Inc. ENB has an Earnings ESP of +1.77% and is a Zacks #2 Ranked player. The company is scheduled to release second-quarter results on Jul 29. You can see the complete list of today’s Zacks #1 Rank stocks here.

Range Resources Corporation RRC has an Earnings ESP of +7.29% and a Zacks Rank of 2. It is scheduled to report second-quarter results on Aug 3.

Cimarex Energy Co. XEC has an Earnings ESP of +13.23% and holds a Zacks Rank #2. It is set to report second-quarter results on Aug 5.

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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.

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