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Why Is Range Resources (RRC) Down 7% Since Last Earnings Report?

A month has gone by since the last earnings report for Range Resources (RRC). Shares have lost about 7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Range Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Range Resources Tops Earnings & Revenue Estimates in Q4

Range Resourcesreported fourth-quarter adjusted earnings of $1.26 per share, beating the Zacks Consensus Estimate of $1.12. The bottom line significantly improved from the prior-year quarter’s earnings of 96 cents per share.

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Total quarterly revenues of $1,630 million surpassed the Zacks Consensus Estimate of $1,019 million. The top line also improved from the prior-year quarter’s $1,567 million.

The strong quarterly results were driven by higher natural gas-equivalent production volumes.

Operational Performance

In fourth-quarter 2022, the company’s production averaged 2,204.5 million cubic feet equivalent per day, up slightly from the prior-year period. Natural gas contributed 69% to total production, while NGLs and oil accounted for the rest.

Oil production declined 23% from the year-ago period, while NGL output increased 6%. Natural gas production declined.

Its total price realization (excluding derivative settlements and before third-party transportation costs) averaged $5.36 per thousand cubic feet equivalent (Mcfe), down 5% year over year. Natural gas prices rose 5% on a year-over-year basis to $5.52 per Mcf. NGL prices declined 25%, while oil prices increased 8%.

Costs & Expenses

Total costs and expenses declined to $632.6 million from $657 million in the year-ago quarter. Total transportation, gathering, processing and compression costs, as well as exploration costs, declined in the reported quarter.

Capital Expenditure & Balance Sheet

In the fourth quarter, the company’s drilling and completion expenditure was $99.9 million. An amount of $9.5 million was used in acreage and gathering facilities.

At the quarter end, it had total debt of $1,842 million.

Outlook

For 2023, Range Resources expects total production of 2.12-2.16 billion cubic feet equivalent per day (Bcfe/d), with 30% attributed to liquid production.

RRC anticipates capital spending of $570-$615 million for the year. Direct operating expenses are projected to be 11-13 cents per Mcfe, while exploration expenses are estimated at $22-$28 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -21.78% due to these changes.

VGM Scores

At this time, Range Resources has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Range Resources has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

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