Markets
WTI

Will Q4 Earnings Hold a Surprise for Cabot (COG) Stock?

Upstream energy firm, Cabot Oil & Gas CorporationCOG is set to report fourth-quarter 2016 results on Feb 24, before the market opens.

In the last four quarters, Cabot posted an average negative earnings surprise of 25%. The underperformance stemmed from weakness in oil and gas prices.

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

Factors to Consider This Quarter

Cabot's portfolio is spread between low-risk/long reserve-life properties and large-volume/rapid-payout assets. Also, the company's large prospect inventories that have a broad mix of production and payout profiles bode well for the upcoming earnings.

Cabot Oil & Gas Corporation Price and EPS Surprise

Cabot Oil & Gas Corporation Price and EPS Surprise | Cabot Oil & Gas Corporation Quote

Cabot boasts a conservative balance sheet with $500 million of cash on hand and a manageable leverage of less than 35%. This provides the company ample flexibility to make acquisitions as well as grow internally. We also appreciate the company's ongoing cost-control measures.

However, Cabot is a natural gas dominated exploration firm with high exposure to commodity prices. As a result, the company's earnings and cash flows are likely to be adversely affected by the persistent crude price weakness.

Also, Cabot is likely to have spent $380 million in 2016, which is much lower than the 2015 spending level of around $775 million. This might affect production and cash flows.

Earnings Whispers

Our proven model does not conclusively show that Cabot will beat 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) for this to happen. 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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of a penny. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter .

Zacks Rank: Cabot has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, a 0.00% Earnings ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Although an earning beat looks uncertain for Cabot, here are some firms that you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter.

W&T Offshore, Inc. WTI is expected to release fourth-quarter earnings results on Mar 14. The company has an Earnings ESP of +73.91% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Sprague Resources LP SRLP has an Earnings ESP of +3.64% and a Zacks Rank #2. The partnership is anticipated to release fourth-quarter earnings on Mar 9.

Carrizo Oil & Gas, Inc. CRZO has an Earnings ESP of +6.25% and a Zacks Rank #2. The company is likely to release fourth-quarter earnings on Feb 23.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks - absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Cabot Oil & Gas Corporation (COG): Free Stock Analysis Report

W&T Offshore, Inc. (WTI): Free Stock Analysis Report

Carrizo Oil & Gas, Inc. (CRZO): Free Stock Analysis Report

Sprague Resources LP (SRLP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

WTI SRLP COG

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More