We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Diamondback's (FANG) Q2 Earnings Preview: Things to Consider
Read MoreHide Full Article
Diamondback Energy (FANG - Free Report) is set to release second-quarter 2024 results on Aug 5. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $4.46 per share on revenues of $2 billion.
Let’s delve into the factors that might have influenced the Permian-focused oil and gas producer’s performance in the June quarter. But it’s worth taking a look at FANG’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, this Midland, TX-based upstream player beat the consensus mark on strong production. Diamondback had reported adjusted earnings per share of $4.50 in the first quarter, beating the Zacks Consensus Estimate of $4.29. Revenues of $2.3 billion also breezed past the Zacks Consensus Estimate by 6.6%.
FANG beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, which resulted in an average earnings surprise of 3.4%. This is depicted in the graph below:
The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 21.2% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 13.5% increase from the year-ago period.
Factors to Consider
Diamondback Energy, like all independent exploration and production companies, is buoyed by strength in oil prices. A rise in crude realizations generally lifts the company's earnings and cash flow outlook while pushing its shares higher. This is exactly what happened over the past few months, with oil prices rallying.
Diamondback Energy is expected to have benefited from higher production during the second quarter. The company continues to churn out impressive volumes from its wide inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for FANG’s average second-quarter volume is pegged at 462,689.5 barrels of oil equivalent per day (BOE/d), up 2.8% from the year-ago quarter’s level of 449,912 BOE/d.
However, despite efforts to protect gas prices through hedging and pipeline commitments, the Permian Basin continues to face challenges with gas pricing due to the increased associated gas supply. The structural challenge of continued associated gas supply could affect the profitability of drilling operations, especially for operators relying on gas production as a significant part of their portfolio.
Investors should note that our model projection for FANG’s second-quarter average realized natural gas price is pegged at 81 cents per thousand cubic feet, down from the year-ago quarter’s level of 94 cents. This contraction in natural gas realization is expected to have limied Diamondback Energy’s second-quarter earnings growth potential and impact profitability.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Diamondback Energy is likely to beat estimates in the second quarter. 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. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -1.38%.
Zacks Rank: FANG currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
While an earnings beat looks uncertain for Diamondback Energy, here are some firms from the energy space that you may want to consider on the basis of our model:
Sunoco LP (SUN - Free Report) has an Earnings ESP of +1.96% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 7.
Over the past 60 days, the Zacks Consensus Estimate for Sunoco’s 2024 earnings has moved up 10%. Valued at around $5.6 billion, SUN has gained 20.2% in a year.
Solaris Oilfield Infrastructure, Inc. (SOI - Free Report) has an Earnings ESP of +14.29% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 8.
Solaris Oilfield Infrastructure has a trailing four-quarter earnings surprise of 12.6%, on average. Valued at around $581.5 million, SOI has gained 23.5% in a year.
MPLX LP (MPLX - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 6.
The Zacks Consensus Estimate for 2024 earnings of MPLX indicates 5.8% growth. Valued at around $43.8 billion, MPLX has gained 21.1% in a year.
Image: Bigstock
Diamondback's (FANG) Q2 Earnings Preview: Things to Consider
Diamondback Energy (FANG - Free Report) is set to release second-quarter 2024 results on Aug 5. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $4.46 per share on revenues of $2 billion.
Let’s delve into the factors that might have influenced the Permian-focused oil and gas producer’s performance in the June quarter. But it’s worth taking a look at FANG’s previous-quarter performance first.
Highlights of Q1 Earnings & Surprise History
In the last reported quarter, this Midland, TX-based upstream player beat the consensus mark on strong production. Diamondback had reported adjusted earnings per share of $4.50 in the first quarter, beating the Zacks Consensus Estimate of $4.29. Revenues of $2.3 billion also breezed past the Zacks Consensus Estimate by 6.6%.
FANG beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, which resulted in an average earnings surprise of 3.4%. This is depicted in the graph below:
Diamondback Energy, Inc. Price and EPS Surprise
Diamondback Energy, Inc. price-eps-surprise | Diamondback Energy, Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for the second-quarter bottom line has remained unchanged in the past seven days. The estimated figure indicates a 21.2% improvement year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 13.5% increase from the year-ago period.
Factors to Consider
Diamondback Energy, like all independent exploration and production companies, is buoyed by strength in oil prices. A rise in crude realizations generally lifts the company's earnings and cash flow outlook while pushing its shares higher. This is exactly what happened over the past few months, with oil prices rallying.
Diamondback Energy is expected to have benefited from higher production during the second quarter. The company continues to churn out impressive volumes from its wide inventory of drill-ready locations in the Permian Basin — America's hottest and lowest-cost shale region. Consequently, our expectation for FANG’s average second-quarter volume is pegged at 462,689.5 barrels of oil equivalent per day (BOE/d), up 2.8% from the year-ago quarter’s level of 449,912 BOE/d.
However, despite efforts to protect gas prices through hedging and pipeline commitments, the Permian Basin continues to face challenges with gas pricing due to the increased associated gas supply. The structural challenge of continued associated gas supply could affect the profitability of drilling operations, especially for operators relying on gas production as a significant part of their portfolio.
Investors should note that our model projection for FANG’s second-quarter average realized natural gas price is pegged at 81 cents per thousand cubic feet, down from the year-ago quarter’s level of 94 cents. This contraction in natural gas realization is expected to have limied Diamondback Energy’s second-quarter earnings growth potential and impact profitability.
What Does Our Model Say?
The proven Zacks model does not conclusively show that Diamondback Energy is likely to beat estimates in the second quarter. 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. But that’s not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -1.38%.
Zacks Rank: FANG currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
While an earnings beat looks uncertain for Diamondback Energy, here are some firms from the energy space that you may want to consider on the basis of our model:
Sunoco LP (SUN - Free Report) has an Earnings ESP of +1.96% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 7.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 60 days, the Zacks Consensus Estimate for Sunoco’s 2024 earnings has moved up 10%. Valued at around $5.6 billion, SUN has gained 20.2% in a year.
Solaris Oilfield Infrastructure, Inc. (SOI - Free Report) has an Earnings ESP of +14.29% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 8.
Solaris Oilfield Infrastructure has a trailing four-quarter earnings surprise of 12.6%, on average. Valued at around $581.5 million, SOI has gained 23.5% in a year.
MPLX LP (MPLX - Free Report) has an Earnings ESP of +0.34% and a Zacks Rank #3. The firm is scheduled to release earnings on Aug 6.
The Zacks Consensus Estimate for 2024 earnings of MPLX indicates 5.8% growth. Valued at around $43.8 billion, MPLX has gained 21.1% in a year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.