Upstream energy firm Cabot Oil & Gas Corporation ( COG ) is set to report first-quarter 2015 results on Apr 24, before the market opens.
Last quarter, Cabot posted a negative earnings surprise of 4.35%. In fact, during the last four quarters, the company posted average earnings surprise of negative 5.22%. Let's see how things are shaping up for this announcement.
Factors to Consider this Quarter
Cabot's diversified asset portfolio, which spreads between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties, helps it to achieve industry leading rates of return.
The company is a natural gas dominated exploration firm - more than 95% of the total production comes from the commodity (per full-year 2014 results). However, weak pricing of the commodity owing to abundant supply might reflect negatively on the upcoming earnings.
With gas prices significantly below the marginal cost of production − usually $4.9-$5.9 per Mcf − in North America and West Texas Intermediate (WTI) crude price hovering between $45 and $54 per barrel, Cabot has not been able to extract as much value for its products as expected. This has put the group's profit margins under pressure.
Our proven model does not conclusively show that Cabotis likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Cabotcurrently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 5 cents.
Zacks Rank. Cabot carries a Zacks Rank #3 (Hold). Though this increases the predictive power, a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Marathon Petroleum Corp. MPC has an Earnings ESP of +1.77% and a Zacks Rank #1 (Strong Buy). The company is slated to release earnings on Apr 30.
Suncor Energy Inc. SU has an Earnings ESP of +400.00% and a Zacks Rank #2 (Buy). The company is slated to release earnings on Apr 29.
Cenovus Energy Inc. CVE has an Earnings ESP of +58.82% and a Zacks Rank #2. The company is slated to release earnings on Apr 29.