WPX Energy ( WPX ) will release fourth-quarter 2014 financial results before the market opens on Feb 26, 2015. In the prior quarter, this independent oil and gas company reported a negative earnings surprise of 150%. WPX Energy currently has a Zacks Rank #3 (Hold). Let's see how things are shaping up for this announcement.
Factors to Consider
WPX Energy is going through a transformation process and is working on its long-term plans to concentrate on high-margin assets. During the fourth quarter, the company signed an agreement to sell its operations in northeast Pennsylvania and release certain firm transportation capacity to Southwestern Energy Company ( SWN ) for nearly $300 million.
The company has boosted oil production over the past two years and the same is expected to grow going forward. WPX Energy's strategy of investing in its assets in the Williston, San Juan and Piceance basins is also likely to generate strong returns.
Our proven model indicates that WPX Energy is not likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP : This is because the Most Accurate estimate stands at a loss of 11 cents per share, in line with the Zacks Consensus Estimate, resulting in a 0.00% ESP.
Zacks Rank : WPX Energy's Zacks Rank #3 when combined with a 0.00% ESP complicates the forecasting power.
We caution against stocks with Zacks Ranks #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 operators in the space worth considering as our model shows they have the right combination of elements to post an earnings beat this quarter.
Newfield Exploration Co. ( NFX ) has an earnings ESP of +9.30% and a Zacks Rank #3.
Clayton Williams Energy, Inc. ( CWEI ) has an earnings ESP of +2.47% and a Zacks Rank #3.