Range Resources Corp (RRC) is a top performer in energy, currently trading just 10% off its recent 52-week high in spite of market and sector weakness. With estimates taking a big jump on strong Q2 results, this Zacks #1 Rank stock is burning with momentum.
Company Description
Range Resources is a natural gas company exploration and production company with its primary emphasis in the Appalachian and southwest regions of the United States. The company was founded in 1975 and has a market cap of $9.5 billion.
Energy companies have taken a hit in the weak market as investors rotate into more conservative segments of the market. But RRC has bucked that trend, currently trading in elevated territory after reporting strong Q2 results in late July that came in well ahead of expectations.
Second-Quarter Results
Revenue for the period was up 60% from last year to $307 million. Earnings also came in strong at 27 cents, 125% ahead of the Zacks Consensus Estimate.
The big gain in sales came on the company’s ability to boost production, with daily production volume up 8% from last year. It also capitalized on an up tick in natural gas prices, with average price realization up 13.6%.
Range is about as much a pure play on natural gas as you can find, with natural gas comprising 76% of production and natural gas liquids chiming in at 17%.
Financial Profile
With strong earnings momentum in hand, Range’s financial profile has been on the upswing, with cash and short-term investments up 73% from last year to $289 million while total debt fell $73 million to $1.79 billion.
Estimates
We saw some bullish movement in estimates off the good quarter, with the current year adding 36 cents to 88 cents. The next-year estimate is pegged at $1.44, a bullish 63% growth projection.
Valuation
But in spite of the gains, the valuation picture still looks solid, with a PEG ratio of 1.04, only marginally higher than the benchmark for value of 1. Here’s something else to keep in mind. A lot of these pure play natural gas companies are trading with higher valuations because a number from the sector have been scooped up by the majors like Conoco and Exxon that want to expand in the field.
12-Month Chart
On the chart, shares recently pulled back a bit with the market after hitting a new 52-week high on the good quarter. Look for support from the trend on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Momentum Trader Service.
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