U.S. energy firm Apache Corp (APA) is set to release fourth-quarter 2014 financial results before the opening bell on Feb 12, 2015.
During the last four quarters, the company posted a negative earnings surprise of 0.68%. Let’s see how things are shaping up for this announcement.
Factors Likely to Influence this Quarter
Being an oil and gas exploration and production (E&P) player, the fate of Apache’s business depends on the price of the respective commodities.
Among the commodities, during the entire fourth quarter, the pricing environment of crude was significantly weaker than the year-ago quarter. This was owing to excess supply of the commodity and lacklustre global demand. Hence, we can say that the quarter was not a favorable period for oil E&P companies.
Since most of Apache’s output comprises crude, we are sceptical of the company beating our fourth-quarter estimate.
Earnings Whispers?
Our proven model does not conclusively show that Apache 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, 2 or 3 for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. This leads to an ESP of -6.58% for Apache as the Most Accurate estimate stands at 71 cents while the Zacks Consensus Estimate is pegged higher at 76 cents.
Zacks Rank: Apache has a Zacks Rank #3 (Hold). Though this increases our predictive power, we caution investors against the stock going into the earnings announcement because when combined with Earnings ESP of -6.58%, the possibility of an earnings surprise is lowered.
Stocks to Consider
Here are some companies to consider as our model shows these have the right combination of elements to post an earnings beat this quarter.
LRR Energy L.P (LRE) with an Earnings ESP of +3.13% and a Zacks Rank #2 (Buy). The partnership is expected to release earnings on Mar 3.
Tesoro Corporation (TSO) with an Earnings ESP of +1.35% and a Zacks Rank #2. The company will likely release earnings on Feb 11.
Seadrill Partners LLC (SDLP) with an Earnings ESP of +10.53% and a Zacks Rank #3. The partnership is likely to release earnings on Feb 26.
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