On Jun 26, ConocoPhillips COP was upgraded to a Zacks Rank #1 (Strong Buy).
Factors of the Upgrade
The Zacks Consensus Estimate for 2018 earnings per share has been revised upward from $3.83 to $4.11 over the last 30 days. The Zacks Consensus Estimate for 2019 earnings rose to $4.27 from $3.96 over the same time frame. This adds to the company’s already impressive earnings profile. ConocoPhillips has surpassed the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 226.9%.
We expect the company to record earnings growth of 585% and 4% in 2018 and 2019, respectively.
In terms of production and proved reserves, ConocoPhillips is the largest exploration and production player in the world. Also, the company’s upstream activities, spread across 17 countries, reflect its diversified operations. Moreover, ConocoPhillips’ focus to increase production from the more profitable unconventional resources through 2020 is expected to boost cashflow.
It is to be noted that ConocoPhillips’ first-quarter 2018 production comprised of roughly 50% oil. The ‘oilier’ nature of its volume mix positions it well to benefit from strengthening oil prices.
On top of that, ConocoPhillips has strong commitment to return cash to shareholders through dividend payments and share buybacks. The oil and gas explorer recently hiked the quarterly dividend payout by 7.5%. The company also boosted its strategic stock repurchase program through 2018 by 33%.
All these developments are reflected in ConocoPhillips’ impressive pricing chart. Over the past year, the stock has rallied 56.4%, outperforming the 41.2% collective gain of the stocks belonging to the industry.
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Other Stocks to Consider
Other prospective players in the energy space include Anadarko Petroleum Corporation APC, Eclipse Resources Corporation ECR and Chevron Corporation CVX. Anadarko carries a Zacks Rank #2 (Buy), while Eclipse and Chevron sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
We expect Anadarko Petroleum to witness year-over-year earnings growth of 229.6% in 2018.
Eclipse is expected to record revenue growth of 13.5% through 2018.
Chevron will likely see year-over-year earnings growth of 130.3% in 2018.
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