Upstream energy firm Cabot Oil & Gas Corporation COG is set to report second-quarter 2016 results on Jul 29, before the market opens.
CABOT OIL & GAS Price and EPS Surprise
Last quarter, Cabot posted a negative earnings surprise of 15.38%. In fact, the company posted an average negative earnings surprise of 21.79% in the last four quarters. Let’s see how things are shaping up for this announcement.
Earnings Whispers
Our proven model shows that Cabot is likely to beat on earnings because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +12.50%. This is because the Most Accurate estimate stands at a loss of 7 cents, while the Zacks Consensus Estimate is pegged wider at a loss of 8 cents. This is a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: Cabot carries a Zacks Rank #2 (Buy), which when combined with a positive Earnings ESP, makes us confident about an earnings beat.
Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. The Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.
What is Driving the Better-than-Expected Earnings?
Cabot Oil & Gas Corp.'s diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties, with further variety from large prospect inventories in the Rocky Mountains and the Anadarko Basin that have a broad mix of production and payout profiles.
The company is a natural gas dominated exploration firm, with more than 95.5% of its total production coming from the commodity (per first-quarter 2016 results). It is to be noted that Cabot has hedged a portion of its projected 2016 production, which lowers its commodity-price exposure and protects it from the possibility of a downside. We also appreciate the company’s ongoing cost-control measures.
Stocks to Consider
Here are some companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Legacy Reserves LP LGCY has an Earnings ESP of +31.58% and a Zacks Rank #1.
Northern Oil and Gas, Inc. NOG has an Earnings ESP of +20.00% and a Zacks Rank #1.
Spectra Energy Corp SE has an Earnings ESP of +16.00 % and a Zacks Rank #1.
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