On Jan 3, Pioneer Natural Resources Company PXD was raised to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Earnings estimate revisions are at the core of the Zacks investment philosophy. Stocks that have recently seen upward revision in estimates tend to outperform the market over the next nine to 12 months.
Over the last 30 days, the Zacks Consensus Estimate for fourth-quarter earnings has been revised higher from 65 cents to 72 cents. Also, for 2017, estimates were raised from $1.54 to $1.59.
Pioneer Natural has an impressive earnings surprise history. The energy giant managed to surpass the Zacks Consensus Estimate in the prior four quarters, the average positive surprise being 67.6%. Also, we expect the company to witness year-over-year earnings improvement of 896.5% in 2017 and 122.9% in 2018.
Also, Pioneer Natural’s balance sheet looks impressive. Total cash and equivalents as of Sep 30, 2017, was recorded at nearly $2 billion, which can easily take care of the current debt of $449 million. Moreover, the company’s long-term debt has been steadily declining since 2016.
The business scenario looks profitable as West Texas Intermediate (WTI) oil recently traded at $60.74 per barrel — last touched before June 2015 — per Reuters. Also, natural gas traded above the psychological mark of $3 per million British Thermal Unit (BTU). Overall, the favorable commodity pricing scenario could fetch the exploration and production company attractive cashflow.
Share price of Pioneer Natural, belonging to the Zacks Oil US Exploration industry, has rallied 6.2% in the last six months.
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Other Stocks to Consider
A few other prospective stocks in the energy sector are Lonestar Resources US Inc. LONE, Northern Oil and Gas Inc. NOG and Cabot Oil & Gas Corp. COG. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Fort Worth, TX, Lonestar is an upstream energy player. The company is expected to post year-over-year earnings growth of 81.3% in 2017.
Based in Minnetonka, MN, Northern Oil is an upstream energy player. The company’s 2017 revenues are estimated to grow almost 48%.
Headquartered in Houston, TX, Cabot is involved in exploration of oil and gas. The stock will likely report earnings growth of 350.8% in 2017.
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