It has been about a month since the last earnings report for Coterra Energy (CTRA Quick QuoteCTRA - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cabot due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Coterra Energy Beats on Q3 Earnings

Coterra Energy reported third-quarter 2023 adjusted earnings per share of 50 cents, which beat the Zacks Consensus Estimate of 44 cents. The outperformance reflects strong production and lower cost.

However, the company’s bottom line plunged from the year-ago adjusted profit of $1.42 due to weaker oil and natural gas realizations.

Coterra Energy’s operating revenues of $1.4 billion missed the Zacks Consensus Estimate by $27 million and fell 46.2% from the year-ago figure of $2.5 billion.

Production & Price Realizations

The average third-quarter daily production (comprising 72% natural gas) increased 4.5% from the year-ago level to 670.3 thousand barrels of oil equivalent (Mboe) and surpassed the Zacks Consensus Estimate of 644 Mboe. While natural gas volume for the period came in at 267.1 billion cubic feet/Bcf (up 3.4% year over year), oil output totaled 8.5 million barrels (MMBbls) — an improvement of 4.9%. The consensus mark called for 260 Bcf of natural gas and 8.39 MMBbls of crude.

The average sales price for crude during the third quarter was $80.80 per barrel, reflecting a 13.4% decrease from the prior-year realization of $93.35 and less than the consensus mark of $82. The average realized natural gas price was $1.80 per thousand cubic feet compared to $6.37 in the year-earlier period and $2.03 per the Zacks Consensus Estimate.

Costs & Expenses

The average unit cost in the quarter fell to $15.32 per barrels of oil equivalent (boe) from the year-ago quarter’s $17.45. This was mainly on account of a decline in unit operating cost, which dropped 13% year over year to $7.99 per boe. Furthermore, Coterra’s depreciation outlay decreased by 4.7% from the third quarter of 2022 on a per barrel basis.

Financial Position

Cash flow from operations went down 57.2% to $758 million, while Coterra’s cash capital expenditure for drilling and development totaled $556 million. The company’s free cash flow for the quarter was $250 million. It also executed $60 million in share repurchases during the period.

As of Sep 30, the company had $847 million in cash and cash equivalents. Coterra Energy had a long-term debt (including the current portion) of $2.2 billion, reflecting a debt-to-capitalization of 14.5%.

Guidance

Coterra Energy has maintained its budgeted capital spending between $2 billion and $2.2 billion this year. Meanwhile, the company sees a cash flow of approximately $3.5 billion and a free cash flow of around $1.3 billion.

The company is targeting an average daily production in the range of 655 Mboe to 665 Mboe. Further, Coterra expects oil volumes in the band of 94.5-95.5 thousand barrels per day while churning out 2,840-2,870 million cubic feet of natural gas.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

Currently, Cabot has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Cabot has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.