Is a Beat in Store for Hess (HES) This Earnings Season?

Hess Corporation HES is set to report second-quarter 2020 results on Jul 29, before the opening bell.

In the last-reported quarter, the independent explorer and producer reported a loss of 60 cents per share, narrower than the Zacks Consensus Estimate of a loss of 65 cents, thanks to higher oil and gas production from the prolific Bakken play and improved Midstream profits on increased throughput volumes.

Notably, the company beat the Zacks Consensus Estimate for bottom line in two of the past four quarters, the average earnings surprise being 2.6%. This is depicted in the graph below:

Hess Corporation Price and EPS Surprise

Hess Corporation price-eps-surprise | Hess Corporation Quote

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

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter loss of $1.10 per share has seen one upward revision and three downward movements in the past 30 days. The figure suggests a year-over-year decline of 1,122.2%.

Further, the Zacks Consensus Estimate for revenues is pegged at $1 billion for the quarter, indicating a decline of 39.7% from the year-ago reported figure.

What Does the Zacks Model Say?

Our proven model predicts an earnings beat for Hess 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Hess has an Earnings ESP of +3.20%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The upstream company currently carries a Zacks Rank #2.

Factors to Consider

From April-end, the price of West Texas Intermediate (WTI) crude improved more than 239% through the June quarter owing to the partial recovery in fuel demand with the easing of lockdown measures. The recovered commodity pricing scenario is likely to have supported Hess.

Notably, the Zacks Consensus Estimate for second-quarter crude oil production is pegged at 183 thousand barrel per day (MBbls/D), suggesting an improvement from the year-ago 161 MBbls/D. Thus, with oil contributing significantly to total production, recovering commodity price and higher expected production volumes are likely to have supported the upstream player’s second-quarter performance.

Other Stocks to Consider

Investors can also consider the following players from the energy space that also have the right combination of elements to post an earnings beat in the to-be-reported quarter:

Cabot Oil Gas Corporation COG has an Earnings ESP of +5.00% and is a Zacks #3 Ranked player. The company is scheduled to release second-quarter results after the closing bell on Jul 30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Midstream Corporation AM has an Earnings ESP of +27.87% and a Zacks Rank of 3. It is scheduled to report second-quarter results on Jul 29.

Enbridge Inc ENB has an Earnings ESP of +0.78% and a Zacks Rank #3. The firm is scheduled to release earnings on Jul 29.

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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.