Hess (HES) Gears Up for Q1 Earnings: What's in the Cards?

Hess Corporation HES is set to release first-quarter 2020 results on May 7, before the opening bell.

In the last reported quarter, the company’s loss per share of 60 cents was wider than the Zacks Consensus Estimate of a loss of 56 cents. The quarterly results were affected by lower commodity price realization and increased operating expenses, partially offset by higher hydrocarbon production.

The oil & gas explorer has a trailing four-quarter positive earnings surprise of 34.4%, on average. In the last four quarters, the company’s earnings beat the Zacks Consensus Estimate twice, missed once and reported in line on the other occasion. This is depicted in the graph below:

Hess Corporation Price and EPS Surprise

Hess Corporation Price and EPS Surprise

Hess Corporation price-eps-surprise | Hess Corporation Quote

 

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

Trend in Estimate Revision

The Zacks Consensus Estimate of a loss of 65 cents for the first quarter has seen no upward movement but four downward revisions by firms in the past 30 days. The bottom-line projection indicates a decline of more than 822% on a year-over-year basis, considering the downward revisions by all the firms.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $1.5 billion, suggesting a decline of 5.9% from the year-ago reported figure.

Factors at Play

The upstream energy player has an attractive portfolio of acreages in the Bakken oil shale play, which is likely to have supported first-quarter production. The Zacks Consensus Estimate for first-quarter total production is pegged at 327 thousand barrels of oil equivalent per day (MBoe/d), which calls for a rise from the year-ago reported figure of 278 MBoe/d. The consensus estimate for oil production in the United States is pegged at 155 thousand barrels, indicating a rise from the year-ago level of 135 MBoe/d.

However, the Zacks Consensus Estimate for U.S. average crude oil prices (excluding hedging) is $44.72 per barrel, which indicates a decline from $53.51 reported in the year-ago quarter. Moreover, the same for natural gas prices (including hedging) in the United States is pegged at $1.16 per thousand cubic feet, signaling a decrease from $2.50 in the year-ago period.

An increase in total production is expected to reflect on the company’s results in the first quarter. However, declining average selling prices of oil and gas in the domestic market might have offset the gains.

What Our Model Unveils

Our proven model does not conclusively predict an earnings beat for Hess this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here as elaborated below.

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Hess has an Earnings ESP of -2.46% as the Most Accurate Estimate of a loss of 67 cents per share is wider than the Zacks Consensus Estimate of a loss of 65 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Stocks That Warrant a Look

Though an earnings beat looks uncertain for Hess, here are a few firms that you may want to consider on the basis of our model. These have the right combination of elements to post an earnings beat in the upcoming quarterly reports:

Canadian Natural Resources Ltd. CNQ has an Earnings ESP of +36.36% and holds a Zacks Rank #3. It is set to report first-quarter results on May 7. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunoco LP SUN has an Earnings ESP of +14.75% and a Zacks Rank of 3. It is scheduled to report first-quarter results on May 11.

Noble Midstream Partners LP NBLX has an Earnings ESP of +14.04% and holds a Zacks Rank #3. It is set to report first-quarter results on May 8.

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Hess Corporation (HES) : Free Stock Analysis Report
 
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