What's in Store for Hess Corporation (HES) in Q1 Earnings?
Oilfield services firm Hess Corporation HES is set to report first-quarter 2017 results on Apr 26, before the opening bell.
Last quarter, the company incurred loss from continuing operations (excluding special items) of $1.01 per share, narrower than the Zacks Consensus Estimate of a loss of $1.09 as well as the year-ago loss of $1.40. Let’s see how things are shaping up for this announcement.
Hess Corporation Price and EPS Surprise
Hess Corporation Price and EPS Surprise | Hess Corporation Quote
Factors at Play
Overall, the first quarter was favorable for oil exploration and production (E&P) companies. These firms continued to gather to the oil patches in a bid to increase production and benefit from the oil price improvement. This is evidenced by the improved rig count data issued by Baker Hughes Inc. (BHI).
The company announced a year-over-year increase in capital spending, which is likely to have resulted in higher production than 2016. To be precise, Hess increased its 2017 capital expenditure by 18% to $2.3 billion from $1.9 billion spent in 2016.
However, production levels are expected to decrease and are estimated between 300 thousand barrels of oil equivalent per day (mboed) and 310 mboed compared with full-year 2016 net production of 321 mboe/d.
Moreover, Hess’ stock has shown weakness in the last three months. During the aforesaid period, shares of the company lost 16.2% compared with 9.6% decline for the Zacks categorized Oil & Gas – International Integrated industry.
Earnings Whispers
Our proven model does not conclusively show that Hess is likely to beat the Zacks Consensus Estimate in the first quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Zacks ESP: The Earnings ESP for Hess is -11.34%. This is because the Most Accurate estimate is pegged at a loss of $1.08 and the Zacks Consensus Estimate stands at a loss of 97 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hess has a Zacks Rank #3, which increases the predictive power. However, the company’s negative Earnings ESP complicates surprise prediction.
Conversely, we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Williams Partners L.P. WPZ has an Earnings ESP of +12.50% and a Zacks Rank #3. The partnership is expected to release earnings on May 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Chesapeake Energy Corp. CHK has an Earnings ESP of +5.00% and a Zacks Rank #3. The company is expected to release earnings on May 4.
Southwestern Energy Company SWN has an Earnings ESP of +5.88% and a Zacks Rank #3. The company is expected to release earnings on Apr 27.
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