The Q2 earnings season is past the halfway mark, with 265 S&P 500 members (collectively accounting for 66.2% of the index’s total market capitalization) having already reported their quarterly numbers. Per the latest Earnings Preview, total earnings for these companies are up 23.6% from the prior-year quarter on 10.1% higher revenues, with 80.8% delivering positive earnings surprises and 72.1% beating revenue estimates. Results from more than 80% of the large-cap index’s total membership will be out by the end of this week.
Combining the actual figures reported by the 265 members and estimates of the pending 235 companies, total earnings are expected to be up 23.6% on a year-over-year basis on 8.8% higher revenues. Moreover, 12 of the 16 Zacks sectors are expected to register double-digit earnings growth. This will follow 24.6% earnings growth in Q1, the highest growth in almost seven years. Notably, the earnings growth pace is marginally below the prior-quarter’s level, while revenue growth pace is clearly tracking higher.
The revenue growth trend so far this earnings season has been phenomenal, with revenues rising 10.1% compared to the 12-quarter average of a meager 1.7%. Moreover, about 62.3% of the companies beat revenue estimates compared with12-quarter average of 50.3%.
All oil-producing companies are expected to benefit from recovering commodity prices, as they will be able to extract more value for products. The positivity in the oil prices was supported by a variety of catalysts, including a series of buoyant weekly EIA crude inventory numbers, worries about tightening global supplies amid strong demand and doubts regarding OPEC’s ability to boost production.
However, natural gas prices at the end of the second quarter were $2.92 MMBtu compared with $3.03/MMBtu in the year-ago quarter, reflecting a decline of around 3.7%. Weakness in natural gas prices is likely to have an adverse effect on gas producing companies.
Stocks to Watch Out for Earnings on Aug 1
Headquartered in Houston, TX, Apache Corporation APA is expected to report second-quarter 2018 results, after market close.
In the last reported quarter, the company delivered a positive earnings surprise of 23.08% on the back of higher oil realizations and greater-than-expected volumes from the key Permian Basin region. Apache delivered an average positive earnings surprise of 86.74% in the last four quarters.
According to our quantitative model, a company needs the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to increase its odds of beating estimates. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Note that we caution against Sell-rated stocks (Zacks Ranks #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Our proven model does not show that Apache is likely to beat estimates because it has an Earnings ESP of 0.00% and a Zacks Rank #3. (Read More: Apache to Report Q2 Earnings: What's in the Offing?)
Apache Corporation Price and EPS Surprise
Apache Corporation Price and EPS Surprise | Apache Corporation Quote
Headquartered in Midland, TX, Concho Resources Inc CXO is expected to report second-quarter 2018 results, after the closing bell.
In the last reported quarter, the company delivered a positive earnings surprise of 23.46% on the back of higher commodity price realizations and robust production growth. Concho delivered an average positive earnings surprise of 40.24% in the last four quarters.
Our proven model does not show that the company is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of 0.00%. (Read More: What's in the Cards for Concho This Earnings Season?)
Concho Resources Inc. Price and EPS Surprise
Concho Resources Inc. Price and EPS Surprise | Concho Resources Inc. Quote
Headquartered in Midland, TX, Antero Resources AR is expected to report second-quarter 2018 results, after the closing bell.
In the last reported quarter, the company delivered a positive earnings surprise of 12.82% on the back of higher liquids price realizations and robust gas production. Antero delivered an average negative earnings surprise of 99.87% in the last four quarters.
Our proven model does not show that the company is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of -9.41%.
Antero Resources Corporation Price and EPS Surprise
Antero Resources Corporation Price and EPS Surprise | Antero Resources Corporation Quote
Headquartered in Tulsa, OK, WPX Energy Inc WPX is expected to report second-quarter 2018 results, after the closing bell.
In the last reported quarter, the company delivered a negative earnings surprise of 200.00%, thanks to lower natural gas price realizations. WPX Energy delivered an average negative earnings surprise of 22.36% in the last four quarters.
Our proven model shows that WPX Energy is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of +13.45%. (Read more: Will WPX Energy Deliver a Beat This Earnings Season?)
WPX Energy, Inc. Price and EPS Surprise
WPX Energy, Inc. Price and EPS Surprise | WPX Energy, Inc. Quote
Tallgrass Energy GP, LP. TGE is expected to report second-quarter 2018 results.
In the last reported quarter, the company delivered a positive earnings surprise of 26.09% on the back of robust results from the Natural Gas and Crude Oil transportation segments. The company reported an average negative earnings surprise of 17.95% in the last four quarters.
Our proven model shows that Tallgrass Energy is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of +5.26%.
Tallgrass Energy GP, LP Price and EPS Surprise
Tallgrass Energy GP, LP Price and EPS Surprise | Tallgrass Energy GP, LP Quote
You can see the complete list of today’s Zacks #1 Rank stocks here.
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