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Will Operational Efficiencies Drive Cabot (COG) Q2 Earnings?

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Cabot Oil & Gas Corporation is set to release second-quarter 2020 results on Thursday Jul 30, after the closing bell.

The Zacks Consensus Estimate for the to-be-reported quarter’s profit is 2 cents per share and for revenues is $297.59 million.

Let’s delve into the factors that might have influenced the company’s June-quarter performance.

Factors to Consider for Q2 Results

Cabot’s business is focused on high-impact natural gas-driven drilling and continues to improve its industry-leading cost structure. Management’s ongoing cost-containment effort is likely to have boosted its profit levels in the second quarter. Driven by operational efficiencies, the company was able to reduce its first-quarter 2020 operating expenses (including interest expense) by 1.35%, a trend that most likely continued in the second quarter as well.

However, the positive impact of cost control might have been partly offset by lower production and price realizations. The Zacks Consensus Estimate for average natural gas price realization (excluding the impact of its hedging program) for the to-be-reported quarter stands at $1.46 per thousand cubic feet, implying a 33.64% decrease from $2.20 reported a year earlier. Investors should know that the company’s total production comprises 100% natural gas.

What Does Our Model Say?

Our proven Zacks model predicts an earnings beat for Cabot this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Cabot has an Earnings ESP of +5.00%.

Zacks Rank: Cabot currently has a Zacks Rank #3, which increases the predictive power of ESP.

Highlights of Q1 Earnings & Surprise History

In the last reported quarter, this Houston, TX-based upstream player’s net income per share — adjusted for special items — of 14 cents beat the Zacks Consensus Estimate of 13 cents. Better-than-expected results can be attributed to higher year-over-year production. However, the bottom line plunged 80.8% from the year-ago figure of 73 cents as natural gas prices declined.

Further, the company’s quarterly revenues of $386.46 million missed the Zacks Consensus Estimate of $387 million. The top line also fell 39.8% from the prior-year number of $641.7 million.

As far as earnings surprises are concerned, Cabot is on a solid footing, having outpaced the Zacks Consensus Estimate in three of the last four reports while meeting the same in the remaining one, the average surprise being 6.05%. This is depicted in the graph below:

Cabot Oil Gas Corporation Price and EPS Surprise

Cabot Oil  Gas Corporation Price and EPS Surprise

Cabot Oil Gas Corporation price-eps-surprise | Cabot Oil Gas Corporation Quote

Other Stocks to Consider

Here are some other firms worth considering from the energy space on the basis of our model, which shows that these too have the right combination of elements to beat on earnings this season:

TechnipFMC plc (FTI - Free Report) has an Earnings ESP of +8.26% and is Zacks #3 Ranked at present. The company is scheduled to release earnings on Jul 29.

Helmerich Payne, Inc. (HP - Free Report) has an Earnings ESP of +2.03% and is presently a #3 Ranked player. The firm is scheduled to release earnings on Jul 29. You can see the complete list of today’s Zacks #1 Rank stocks here.

Oceaneering International, Inc. (OII - Free Report) has an Earnings ESP of +26.39% and a Zacks Rank of 3, currently. The company is scheduled to release earnings on Jul 29.

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