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Can Newfield (NFX) Keep Its Earnings Streak Alive in Q4?

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Newfield Exploration Company is expected to report fourth-quarter 2017 earnings on Feb 20, after the closing bell.

The upstream energy player surpassed the Zacks Consensus Estimate in the last quarter, the positive earnings surprise being 20.9%. Moreover, for the trailing four quarters, the company has an average positive earnings surprise of 18.6%.

Let’s see how things are shaping up for this announcement.

Which Way Are Estimates Treading?

Let’s look at the estimate revision trend in order to get a clear picture of what analysts expect from the company’s upcoming earnings release.

The Zacks Consensus Estimate of 60 cents for current-quarter earnings has remained stable over the last seven days. It reflects an improvement of about 22.5% from the year-ago quarter.

Further, analysts polled by Zacks expect revenues of $501 million for the quarter, up 20.8% from a year ago.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Meanwhile, Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Newfield has a Zacks Rank #3 and an Earnings ESP of +1.64%. Therefore, the company is likely to deliver a beat this quarter. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Factors to Consider

The Zacks Consensus Estimate for average sale price of natural gas is $2.75 per thousand cubic feet (Mcf), higher than last quarter’s $2.58 per Mcf and the year-ago quarter’s $2.37 per Mcf. The Zacks Consensus Estimate for natural gas production for the fourth quarter is 35.59 billion cubic feet (Bcf), up from 30.6 Bcf last quarter and 31.5 Bcf in the year-ago quarter.

The average sales price of natural gas liquids for the fourth quarter is estimated at $27.57 per barrel, higher than last quarter’s $25.72 per barrel and $23.65 per barrel in the year-ago quarter. Production is expected to rise to 3.46 million barrels (MMBbls) from third-quarter production of 3.28 MMBbls and the year-ago quarter’s 2.50 MMBbls.

Average crude oil and condensate sales price is expected at $48.86 a barrel, higher than the third quarter’s $43.96 per barrel and the year-ago quarter’s $48.59 per barrel. Production of crude oil per day for the fourth quarter is expected to fall to 6.17 MMBbls from the previous quarter’s 6.27 MMBbls, but is higher than the year-ago quarter’s 6.10 MMBbls.

We expect the company’s production to increase in the fourth quarter from the year-ago quarter. Also, the price rise is likely to be reflected in handsome fourth quarter numbers.

Other Stocks to Consider

Here are a couple of companies which, per our model, also have the right combination of elements to post an earnings beat this quarter: 

Houston, TX-based EOG Resources (EOG - Free Report) is an upstream company. It has an Earnings ESP of +4.06% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

WildHorse Resource Development Corporation (WRD - Free Report) , based in Houston, TX, is also an upstream energy firm. It has an Earnings ESP of + 5.26% and a Zacks Rank #1.

Dallas, TX-based RSP Permian, Inc. is an upstream energy company with an Earnings ESP of +1.64%. It is a Zacks #1 Ranked player.

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