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Cimarex Energy (XEC) to Post Q3 Earnings: A Beat in Store?

Zacks Equity Research

Cimarex Energy Co. XEC is expected to trump estimates when it releases third-quarter 2019 results on Nov 4, after market close.

The independent oil & gas exploration and production company beat earnings estimates twice in the trailing four quarters.

Cimarex Energy Co Price and EPS Surprise

Cimarex Energy Co Price and EPS Surprise
Cimarex Energy Co Price and EPS Surprise

Cimarex Energy Co price-eps-surprise | Cimarex Energy Co Quote

Let’s see how things have shaped up prior to the announcement.

Which Way are Estimates Headed?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts expect from the company prior to the earnings release.

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The Zacks Consensus Estimate for third-quarter earnings per share has been revised upward over the past 30 days to 94 cents. The figure suggests a year-over-year decline of 52.8%.

Further, the Zacks Consensus Estimate for revenues of $570.4 million suggests a 3.6% drop from the prior-year quarter.

What the Quantitative Model Suggests

Our proven model predicts an earnings beat for Cimarex this time around. This is because it has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP: Cimarex has an Earnings ESP of +1.32%. This is because the Most Accurate Estimate of 95 cents per share is pegged higher than the Zacks Consensus Estimate of 94 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Cimarex currently carries a Zacks Rank #3.

What is Driving the Better-Than-Expected Earnings?

Cimarex, which is a leading explorer and producer of oil and natural gas with prime focus on the prolific Permian and Mid-Continent regions, is likely to have gained from a surge in production in the Permian Basin. The Zacks Consensus Estimate for the company’s third-quarter total production is pegged at 277 thousand barrels of oil equivalent per day (MBoe/d), indicating a rise from 219 MBoe/d in the year-earlier period.

However, the Zacks Consensus Estimate for average realized oil price is $52 per barrel, implying a decline from the year-ago reported figure of $58. Also, the Zacks Consensus Estimate for average realized natural gas price of 91 cents per thousand cubic feet points to a decline from the year-ago reported figure of $1.84.

Although the expected decline in commodity price realization might have affected third-quarter earnings, the significant rise in total production on the back of Permian activities is expected to have offset the negatives and boosted Cimarex’s bottom line.

Q2 Performance

In the last reported quarter, Cimarex’s earnings of 82 cents per share missed the Zacks Consensus Estimate of $1.20 due to lower price realizations from natural gas and liquids.

Other Energy Stocks With Favorable Combination

Here are some other companies from the energy space that you may want to consider on the basis of our model, which shows that these too have the right combination of elements to deliver an earnings beat in the upcoming quarterly reports:

Chesapeake Energy Corporation CHK has an Earnings ESP of +8.24% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Nov 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rattler Midstream LP RTLR has an Earnings ESP of +8.41% and a Zacks Rank of 3. The company is slated to announce third-quarter 2019 earnings on Nov 5.

Plains All American Pipeline, L.P. PAA has an Earnings ESP of +0.43% and is a #3 Ranked player. The company is scheduled to release third-quarter 2019 earnings on Nov 5.

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Plains All American Pipeline, L.P. (PAA) : Free Stock Analysis Report
 
Chesapeake Energy Corporation (CHK) : Free Stock Analysis Report
 
Cimarex Energy Co (XEC) : Free Stock Analysis Report
 
Rattler Midstream LP (RTLR) : Free Stock Analysis Report
 
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