Midstream energy player Rice Midstream Partners L.P. RMP is set to release its second-quarter 2015 results before the opening bell on Thursday, Aug 6.
In the preceding three-month period, the Canonsburg, PA-based partnership delivered a negative earnings surprise of 20.00% due to the plunging commodity prices that hampered production of its clients.
Let’s see how things are shaping up for this announcement.
Factors to Consider This Quarter
The West Texas Intermediate (WTI) crude futures hovered between $50 and $60 per barrel during the entire second quarter (Apr to Jun) on plentiful supplies and lackluster demand. Predictably, there are apprehensions that the dismal oil and gas price environment will restrict Rice Midstream’s transportation volumes and adversely affect second quarter results.
However, some of the partnership’s customers have come out with impressive production figures even amid the commodity price slump, which is likely to aid Rice Midstream’s numbers for the to-be-reported quarter.
In particular, natural gas output from Marcellus Shale – and transported through Rice Midstream’s pipes – has remained strong. Revenues on this front are likely to support the partnership’s cash flows.
Earnings Whispers
Our proven model does not conclusively show that Rice Midstream will beat 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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 18 cents.
Zacks Rank: Rice Midstream has a Zacks Rank #3 (Hold). Though Zacks Rank #1, 2 or 3 increases the predictive power of ESP, the partnership’s ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement.
Stocks to Consider
While earnings beat looks uncertain for Rice Midstream, here are some companies you may want to consider on the basis of our model, which shows that they have the right combination of elements to post an earnings beat this quarter:
Seadrill Partners LLC SDLP with an Earnings ESP of +12.28% and a Zacks Rank #1 (Strong Buy). The company is slated to release earnings on Aug 26.
Calumet Specialty Products Partners L.P. CLMT with an Earnings ESP of +15.79% and a Zacks Rank #2 (Buy). The company is expected to release earnings on Aug 5.
EV Energy Partners L.P. EVEP with an Earnings ESP of +4.17% and a Zacks Rank #2. The company is expected to release earnings on Aug 10.
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