What's in the Cards for Cabot (COG) This Earnings Season?

Cabot Oil & Gas Corporation COG is set to release third-quarter 2020 results after the closing bell on Thursday, Oct 29. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 7 cents per share on revenues of $347 million.

Let’s delve into the factors that might have influenced the natural gas producer’s performance in the September quarter. But it’s worth taking a look at Cabot’s previous-quarter performance first.

Highlights of Q2 Earnings & Surprise History

In the last-reported quarter, the Houston, TX-based operator beat the consensus mark due to higher-than-anticipated production volumes. Cabot had reported adjusted net income per share of 5 cents, higher than the Zacks Consensus Estimate of 3 cents. Moreover, the independent gas exploration company’s quarterly revenues of $332.4 million had come in above the Zacks Consensus Estimate of $298 million.

As far as earnings surprises are concerned, Cabot beat the Zacks Consensus Estimate in three of the last four quarters and met in the other, delivering an earnings surprise of 20.44%, on average. This is depicted in the graph below:


Cabot Oil Gas Corporation Price and EPS Surprise

Cabot Oil  Gas Corporation Price and EPS Surprise

Cabot Oil Gas Corporation price-eps-surprise | Cabot Oil Gas Corporation Quote


Trend in Estimate Revision

The Zacks Consensus Estimate for third-quarter bottom line remained the same in the last seven days. However, the estimated figure indicates 75.9% deterioration year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 19.1% decline from the year-ago period.

Factors to Consider This Quarter

Cabot focuses on high-impact natural gas-focused drilling in the Marcellus Shale, which is expected to have placed it well for volume growth in the to-be-reported quarter. As proof of its robust production profile, the Zacks Consensus Estimate for the company’s overall production for the third quarter is pegged at 224 billion cubic feet equivalent (Bcf). A year ago, Cabot had churned out 220.7 Bcf.

Management’s ongoing cost-containment effort is also likely to have boosted its profit levels in the third quarter. Driven by operational efficiencies, the company was able to reduce its second-quarter 2020 operating expenses by 3%, a trend that most likely continued in the third quarter as well.

However, the positive impact of higher production and cost control might have been offset by lower price realizations. The Zacks Consensus Estimate for average natural gas price realization (including the impact of its hedging program) for the to-be-reported quarter stands at $1.60 per thousand cubic feet, implying a 24.2% decrease from $2.11 reported a year earlier. Investors should know that the company’s total production comprises 100% natural gas.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Cabot is likely to beat estimates in the fiscal first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

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

Earnings ESP: Cabot has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 7 cents per share each.

Zacks Rank: Cabot currently carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult for the stock this earnings season.

Stocks to Consider

While an earnings beat looks uncertain for Cabot, here are some firms from the energy  space that you may want to consider on the basis of our model:

Antero Midstream Corporation AM has an Earnings ESP of +9.89% and a Zacks Rank #2. The firm is scheduled to release earnings on Oct 28.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Devon Energy Corp. DVN has an Earnings ESP of +23.50% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Oct 29.

TC Energy Corporation TRP has an Earnings ESP of +1.45% and is Zacks #3 Ranked. The firm is scheduled to release earnings on Oct 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.

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