Houston, TX-based Noble Energy, Inc. ( NBL ) is scheduled to report fourth-quarter 2014 results before the opening bell on Feb 19. Last quarter, Noble Energy posted a negative earnings surprise of 22.22%. Let's see how things are shaping up for the fourth quarter.
Factors Influencing This Quarter
Noble Energy is an independent oil and gas exploration and production company having high-grade hydrocarbon assets across the U.S. and several international locations. The company has operations in five areas - the Denver/Julesburg Basin in onshore U.S., the Marcellus Shale also in onshore U.S., the deepwater Gulf of Mexico in offshore U.S., West Africa and Eastern Mediterranean.
Noble Energy derives more than half of its revenues from sales of crude oil and condensate. The global supply of crude oil is mounting while demand for the same is on a decline leading to a free fall in oil prices. This is expected to hurt Noble Energy's revenues in the fourth quarter.
On its third-quarter earnings call, Noble Energy slightly lowered its sales volume projection for the fourth quarter to the range of 307-327 thousand barrels of oil equivalent per day (MBoe/d) from its previous projection of 310-330 MBoe/d, considering the sale of the Piceance Basin assets.
Our proven model does not conclusively show that Noble Energy will beat earnings 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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -5.71%. This is because the Most Accurate Estimate is at 33 cents while the Zacks Consensus Estimate is at 35 cents.
Zacks Rank: Noble Energy's Zacks Rank #4 (Sell) when combined with a -5.71% ESP makes an earnings beat unlikely.
As it is, 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 stocks in the oil & gas industry you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Crestwood Equity Partners LP ( CEQP ) has an earnings ESP of +55.56% and a Zacks Rank #3.
Bill Barrett Corp. ( BBG ) has an earnings ESP of +33.33% and a Zacks Rank #3.
Seadrill Partners LLC ( SDLP ) has an earnings ESP of +10.53% and a Zacks Rank #3.
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