Hess Corporation (HES) is slated to report fourth-quarter 2014 results before the opening bell on Jan 28.
In the last quarter, the company’s earnings of $1.24 per share increased 5.1% from $1.18 per share earned in the year-ago quarter. The results came above the Zacks Consensus Estimate of $1.07.
Factors Influencing this Quarter
New York City-based Hess expects increased production driven by continued growth in the Bakken, higher output from the Valhall Field, and the planned start-up of the Tubular Bells Field in the Gulf of Mexico.
We believe that the company’s asset divestiture program and significant progress in multi-year transformation reduced its financing needs in the fourth quarter. Hess remains focused on value creation and is in the pursuit of its previously announced intention to monetize its midstream assets in the Bakken oil shale play in North Dakota.
On the flip side, Hess' sensitivity to gas/oil price volatility, as well as drilling results, costs, geo-political risks and project delays, limited the upside potential in the fourth quarter. As a result, the company’s overall activities during the October-December were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the fourth quarter declined to 29 cents from 40 cents per share over the last 7 days.
Earnings Whispers?
Our proven model does not conclusively show that Hess is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Earnings ESP for Hess is -31.03%. This is because the Most Accurate estimate is 20 cents per share while the Zacks Consensus Estimate is pegged higher at 29 cents.
Zacks Rank: Hess has a Zacks Rank #3 which increases the predictive power of ESP. However, we need to have a positive ESP to be confident of an earnings surprise.
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:
Spectra Energy Partner LP (SEP) has an Earnings ESP of +2.94% and a Zacks Rank #1. The partnership is expected to release earnings on Feb 4.
Valero Energy Partners LP (VLP) has an Earnings ESP of +3.33% and a Zacks Rank #2. The company is slated to release earnings on Feb 5.
Tesoro Corporation (TSO) has an Earnings ESP of +1.40% and a Zacks Rank #2. The company is likely to release earnings on Feb 11.
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