On Aug 7, 2013, Zacks Investment Research upgraded Cabot Oil & Gas Corporation (COG) – an independent energy exploration and production (E&P) company – to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Cabot witnessed rising earnings estimates on the back of excellent second-quarter 2013 results. In fact, this Houston, Texas-based company delivered positive earnings surprises in three of the last four quarters with an average beat of 10.8%. The long-term expected earnings growth rate for this stock also stands at an impressive 35.0%.
On Jul 24, 2013, Cabot reported strong second-quarter 2013 results, owing to higher production and increased gas prices. The company posted second-quarter earnings per share of 42 cents, comfortably beating the Zacks Consensus Estimate of 31 cents. Cabot’s performance also improved considerably from the year-ago profit of 17 cents per share.
Cabot’s diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties, with further variety from large prospect inventories in the Rocky Mountains and the Anadarko Basin that have a broad mix of production and payout profiles.
Moreover, Cabot has achieved consistent success from its drilling program in Marcellus Shale and Eagle Ford. Additionally, armed with significant production increase year-to-date, Cabot is gunning for 2013 volume growth in the range of 44% to 54%.
As a result of these bullish factors, the tendency for an upward estimate revision has been obvious in recent times. The Zacks Consensus Estimate for 2013 has increased by 6.5% to $1.31 per share, as all the estimates were revised higher over the last 30 days.
Stocks to Consider
Other oil and gas exploration and production companies that are expected to significantly outperform the broader U.S. equity markets in the next one to three months are VOC Energy Trust (VOC), Clayton Williams Energy Inc. (CWEI) and Range Resources Corp. (RRC). All three stocks carry a Zacks Rank #1 (Strong Buy).
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