Anadarko Petroleum Corporation APC will release its first-quarter 2015 financial results before the market opens on May 5. In the previous quarter, the oil & gas company reported a negative earnings surprise of 54.88%. Let’s see how things are turning out for the first quarter.
Factors to Note
The ongoing weakness in commodity prices is impacting the profitability of the oil and gas exploration & production companies. During the quarter the company announced that it has lowered its capital budget for 2015 to $5.4–$5.8 billion from $9.3 billion spent in 2014.
The company is expected to spud a lower number of wells in 2015 as compared to prior years due to the weakness in crude.
Anadarko Petroleum took part in two midstream joint ventures in the to-be-reported quarter along with some established names in the business. Panola NGL Pipeline in Texas and Saddlehorn Pipelines in DJ Basin will help Anadarko Petroleum to tap the rising demand for midstream services in North America.
Earnings Whispers?
Our proven model shows that Anadarko Petroleum is not likely to beat earnings estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat consensus estimates. That is not the case here as you will see below.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -3.18%. This is because the Most Accurate estimate is pegged at a loss of 65 cents while the Zacks Consensus Estimate stands at a loss of 63 cents.
Zacks Rank: Though Anadarko Petroleum’s Zacks Rank #3 (Hold) increases the predictive power, the negative ESP makes a positive earnings surprise call unlikely.
We caution against stocks with a Zacks Rank #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 stocks in the U.S. oil exploration and production space you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Noble Energy Inc. NBL has an earnings ESP of +33.33% and a Zacks Rank #3.
Devon Energy Corp. DVN has an earnings ESP of +7.69% and a Zacks Rank #3.
Emerald Oil, Inc. EOX has an earnings ESP of +66.67% and a Zacks Rank #3.
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