What's in the Cards for ConocoPhillips' (COP) Q2 Earnings?

ConocoPhillips COP is scheduled to report second-quarter 2019 results on Jul 30, before the opening bell.

In the last reported quarter, the upstream energy company’s earnings of $1 per share beat the Zacks Consensus Estimate of 92 cents, aided by increased volumes from unconventional assets and higher natural gas price realization. ConocoPhillips beat estimates in the trailing four quarters, delivering average positive earnings surprise of 10.5%.

ConocoPhillips Price and EPS Surprise

ConocoPhillips Price and EPS Surprise

ConocoPhillips price-eps-surprise | ConocoPhillips Quote

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

Which Way are Estimates Trending?

Let’s take a look at estimate revisions to get a clear picture of what analysts are thinking about the company before the earnings release.

The Zacks Consensus Estimate for second-quarter earnings per share of $1.05 has witnessed one upward revision and three downward revisions by firms in the past 30 days. This estimate is indicative of a 3.7% decline from the year-ago reported earnings of $1.09 per share.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $9.6 billion, suggesting an improvement of 4% from the year-ago reported figure.

Factors at Play

Being primarily involved in the exploration and production of oil and natural gas, ConocoPhillips’ earnings and revenues are directly related to commodity prices. Notably, the West Texas Intermediate (WTI) crude price in second-quarter 2019 was lower than the year-ago period. In April, May and June, WTI averaged $63.86, $60.83 and $54.66 per barrel, respectively, per the U.S. Energy Information Administration. In comparison, WTI averaged $66.25, $69.98 and $67.87 per barrel in the year-ago respective months of 2018. The year-over-year decline in crude price may hurt the company’s upstream businesses, as ConocoPhillips has an oil-heavy portfolio.

The company projects second-quarter 2019 production in the range of 1,240-1,280 thousand barrels of oil equivalent per day (MBoe/d), higher than year-ago level of 1,211 MBoe/d. However, quarterly production is expected to be affected by planned turnarounds in Alaska, Canada and Europe. This will likely result in lower output than the first quarter’s 1,318 MBoe/d.

Earnings Whispers

Our proven model does not predict a beat for ConocoPhillips this earnings season. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Earnings ESP: Earnings ESP for the company is -0.14%. This is because the Most Accurate Estimate is pegged lower than the Zacks Consensus Estimate of $1.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.  

Zacks Rank: ConocoPhillips currently carries a Zacks Rank #3. Though a Zacks Rank of 3 increases the predictive power of ESP, a -0.14% ESP makes surprise prediction difficult.

Meanwhile, Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.   

Stocks to Consider

Though an earnings beat looks uncertain for ConocoPhillips, here are a few energy firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the quarter to be reported:

Holly Energy Partners, L.P. HEP has an Earnings ESP of +1.18% and is a #2 Ranked player. The partnership is anticipated to release second-quarter 2019 earnings on Jul 31. You can see the complete list of today’s Zacks #1 Rank stocks here.

TransCanada Corporation TRP is set to report second-quarter 2019 earnings on Aug 1. The stock has an Earnings ESP of +0.34% and a Zacks Rank #3.

Enbridge Inc. ENB is set to report second-quarter 2019 earnings on Aug 2. The stock has an Earnings ESP of +8.88% and a Zacks Rank #3.

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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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