Cabot 1Q Earnings: Likely to Miss - Analyst Blog
23 Aprile 2013 - 5:10PM
Zacks
Domestic energy explorer
Cabot Oil & Gas Corp. (COG) is set to release
its first-quarter 2013 results on Wednesday, Apr 24.
In the preceding three-month period, Cabot delivered a positive
14.29% earnings surprise – the second outperformance in succession
– helped by higher volumes and crude oil prices. Let’s see how
things are shaping up prior to this announcement.
Factors to Consider This Quarter
Cabot’s high natural gas exposure raises its sensitivity to gas
price fluctuations, compared to its more-diversified independent
peers with higher oil production. While cold winter weather across
most parts of the country and flat production volumes have boosted
natural gas prices in recent times, the onset of summer is likely
to test the commodity prices once more. This is likely to affect
the company’s earnings and cash flows.
Being a relatively small player, Cabot lacks the financial
resources of larger industry giants. As such, during the current
prolonged credit crunch, the company is forced to spend within its
internal cash generation. This may prove detrimental to its growth
plans and lower its results.
Earnings Whispers?
Our proven model does not conclusively show that Cabot is likely to
beat the Zacks Consensus Estimate in the first quarter. That is
because a stock needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method) and a Zacks Rank #1 (Strong
Buy) or at least Zacks Rank #2 (Buy) or Zacks Rank #3 (Hold) for
this to happen. Unfortunately this is not the case here as
elaborated below.
Negative Zacks ESP: This is because the Most
Accurate estimate stands at 25 cents, while the Zacks Consensus is
higher at 26 cents. This results in a difference of -3.85%.
Zacks Rank #3 (Hold): Cabot’s Zacks Rank #3
(Hold), however, increases the predictive power of ESP. That said,
we also need to have a positive ESP to be confident of an earnings
surprise call.
We caution against stocks with Zacks Rank #4 and 5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some energy firms 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:
Exterran Partners L.P. (EXLP), Earnings ESP of
+4.35% and Zacks Rank #1 (Strong Buy).
EPL Oil & Gas Inc. (EPL) , Earnings ESP of
+12.50% and Zacks Rank #1 (Strong Buy).
SemGroup Corp. (SEMG), Earnings ESP of +28.95% and
Zacks Rank #1 (Strong Buy).
CABOT OIL & GAS (COG): Free Stock Analysis Report
EPL OIL&GAS INC (EPL): Free Stock Analysis Report
EXTERRAN PTNRS (EXLP): Free Stock Analysis Report
SEMGROUP CORP-A (SEMG): Free Stock Analysis Report
To read this article on Zacks.com click here.
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