ConocoPhillips (COP), an independent exploration and production company, is scheduled to report third-quarter 2014 results before the opening bell on Oct 30. Last quarter, ConocoPhillips posted a 0.6% positive earnings surprise. Let’s see how things are molding for the third quarter.
Factors to Consider This Quarter
ConocoPhillips' exploration initiatives toward liquids-rich plays are gaining momentum through the Eagle Ford, Bakken and North Barnett shale plays. This shift toward liquid-linked assets however witnessed troubled waters in the July-September period owing to high crude stockpiles, as imports climbed and refiners scaled down their utilization rates.
As a result, the quarter witnessed volatile prices and the company expects its daily production fall from 1.557 million barrels of oil equivalent (MMBOE) in the second quarter to a range of 1.435–1.485 MMBOE.
Earnings Whispers
Our proven model does not conclusively show that ConocoPhillips will beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -2.46%. This is because the Most Accurate Estimate is at $1.19 per share while the Zacks Consensus Estimate is pegged higher at $1.22 per share.
Zacks Rank: ConocoPhillips has a Zacks Rank #5 (Sell). Not only do we caution investors against Sell-rated (Rank #4 or 5) stocks going into the earnings announcement, a negative ESP also complicates our surprise prediction.
Stocks to Consider
Here are some stocks in the same industry you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Cobalt International Energy Inc. (CIE), with Earnings ESP of +11.11% and a Zacks Rank #1.
Delek Logistics Partners, LP (DKL), with Earnings ESP of +5.56% and a Zacks Rank #1.
Alon USA Energy Inc. (ALJ), with Earnings ESP of +1.75% and a Zacks Rank #2.
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