CONSOL Energy Inc. (CNX) will release its fourth quarter 2014 financial results before the market opens on Jan 30, 2015. In the prior quarter, this multi-fuel producer reported a negative earnings surprise of 55%. CONSOL Energy currently has a Zacks Rank #3 (Hold). Let’s see how things are shaping up at the company prior to this announcement.
Factors to Consider This Quarter
CONSOL Energy is consistently working towards its long-term strategy of focusing more on natural gas assets. During the quarter the board of directors of CONSOL Energy decided to separate its coal business to form a thermal MLP and a metallurgical coal subsidiary.
Though the above move is unlikely to have an immediate impact it will definitely benefit the company in the long haul with separate management teams assigned to run each of the businesses.
Following the strategic changes CONSOL will retain its core oil and gas exploration and production business and have a controlling interest in the coal MLP and metallurgical coal subsidy. The company will also retain interest in CONE Midstream Partners LP (CNNX).
CONSOL Energy’s focus on expanding its gas operations is yielding positive results. The company expects gas production in the range of 70–75 billion cubic feet equivalent (Bcfe) in fourth quarter, much higher than the year-ago level of 48.5 Bcfe.
Earnings Whispers
Our proven model does not conclusively show that CONSOL Energy is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here.
Negative Zacks ESP: This is because the Most Accurate estimate stands at 15 cents while the Zacks Consensus Estimate is higher at 20 cents, resulting in -25.00% ESP.
Zacks Rank #3 (Hold): CONSOL Energy’s Zacks Rank #3 combined with a -25.00% ESP makes an earnings beat prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies tied to the coal industry worth considering on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter.
Foresight Energy LP (FELP) has an earnings ESP of +3.57% and carries a Zacks Rank #3 (Hold).
Arch Coal (ACI) has an earnings ESP of +5.26% and carries a Zacks Rank #3.
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