CVR Refining LP (CVRR) is set to report third-quarter 2014 results on Oct 30, before the opening bell.
Last quarter, the refiner and marketer of petroleum fuels posted a negative earnings surprise of 2.00%. Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
CVR Refining is likely to benefit from weak crude oil prices that had prevailed in the July–September quarter. With the partnership being a buyer of oil, its third-quarter profitability is likely to have bettered on a fall in the input cost.
Moreover, CVR Refining has been able to sell gasoline and other refined products at profitable prices. The difference between the low input cost and high-end product price has enabled the partnership to book substantial profits. Gasoline demand was also strong throughout the quarter, thus improving sales.
Additionally, the partnership expects third-quarter total refining production between 170,000 and 180,000 barrels per day, higher than the total refining output in the year-ago quarter.
However, CVR Refining’s profitability is directly linked to the Brent-WTI spread, which has narrowed considerably in the past few months. This could reduce the profit margin of the partnership.
Earnings Whispers
Our proven model does not conclusively show that CVR Refining is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: The Earnings ESP is 0.00%. This is because both Most Accurate estimate and Zacks Consensus Estimate stand at 61 cents.
Zacks Rank:CVR Refining carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
Stocks to Consider
Here are some stocks for investors to consider, that, according to our model have the right combination of elements to post an earnings beat this quarter:
Murphy USA Inc. (MUSA) has an Earnings ESP of +20.51% and a Zacks Rank #1 (Strong Buy).
Cobalt International Energy Inc. (CIE) has an Earnings ESP of +11.11% and a Zacks Rank #1.
Delek Logistics Partners LP (DKL) has an Earnings ESP of +5.56% and a Zacks Rank #1.
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