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Oil Stocks to Watch for Earnings on Oct 27: XOM, CVX, COG, PSX

The third-quarter earnings cycle is in full swing, wherein 164 S&P 500 members have reported their numbers. This accounts for 38.2% of the index’s total market capitalization. Per the latest Earnings Trends, total earnings for these companies are up 7% from the same period last year on 4.8% higher revenues, with 72% companies delivering positive earnings surprises and 68.3% beating revenue estimates.

We would like to remind investors that the Oil/Energy sector made a comeback in fourth-quarter 2016 after a prolonged period of weakness. The improvement in the sector’s performance drove the aggregate growth for the S&P 500 Index. In fact, the most important feature of this earnings season seems to be the positive revenue momentum, in terms of  growth as well as beats.

Third-quarter earnings growth seems dismal compared with the prior two quarters. However, the growth rate is expected to improve, as evident from the current upbeat projection of 8.95% growth for fourth-quarter earnings. The energy sector is poised to see the strongest growth in the quarter under review.

True to the predictions, the sector came out quite a winner. So far, for the sector components enlisted on the S&P 500 Index, total Q3 earnings grew 253.9% on 33.5% higher revenues.

Importantly, oil and gas prices during third-quarter supported the growth. Prices of oil at the end of the quarter improved, amid persistent decline in domestic inventories and improvement of supply-demand narrative. With fundamentals pointing to a tighter market, oil price at the end of the third quarter was $51.67 per barrel, up about 10.5% sequentially. A year ago, crude prices were around $45 per barrel.

Prices of natural gas dropped about 3.5% in the July-September period owing to the fuel’s tepid demand due to mild weather conditions and hurricane-related power outages. Despite the sequential fall, natural gas prices remain favorable when compared with the corresponding period of 2016. The commodity ended the quarter at $3 per MMBtu, up more than 3% from the settlement of $2.9 per MMBtu on Sep 30, 2016.

Stocks to Watch for Earnings on Oct 27

ExxonMobil Corporation XOM is the world’s largest publicly traded oil company.

Last quarter, the company delivered earnings of 78 cents per share that missed the Zacks Consensus Estimate of 83 cents. The quarterly earnings, however, increased from 41 cents recorded a year ago. The company beat the Zacks Consensus Estimate in three of the previous four quarters with an average positive earnings surprise of 8.94%.  

Our proven model shows that ExxonMobil is likely to beat estimates this quarter. This is because ExxonMobil has an Earnings ESP of +1.91% and a Zacks Rank #2 (Buy). 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.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our https://www.zacks.com/premium/esp-buy?adid=zp_article_espfil...">Earnings ESP Filter.

Exxon Mobil Corporation Price and EPS Surprise

 

Exxon Mobil Corporation Price and EPS Surprise | Exxon Mobil Corporation Quote

Chevron Corporation CVX is a leading integrated energy player in the world.  Last quarter, the San Ramon, CA-based company reported earnings of 91 cents per share that beat the Zacks Consensus Estimate of 89 cents and was higher than the year-ago profit of 48 cents. The company’s earnings surprise history is impressive, wherein it delivered an average positive earnings surprise of 19.35% in the last four quarters.

Our proven model does not conclusively show that the company is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of -1.93%.

Per Zacks Consensus Estimate, the average crude oil price is estimated at $49.12 per barrel, up 9.2% from the preceding quarter.

Chevron Corporation Price and EPS Surprise

 

Chevron Corporation Price and EPS Surprise | Chevron Corporation Quote

An independent energy exploration company with producing properties mainly in the continental U.S., Cabot Oil & Gas Corp COG, is expected to report third-quarter 2017 results, before the opening bell.

Last quarter, this Houston, TX-headquartered upstream player’s earnings missed the Zacks Consensus Estimate. The results were affected by higher costs but received a boost from higher production.

The company holds a positive earnings surprise history. It beat estimates in three of the last four quarters. An earnings beat looks unlikely for Cabot. In the to-be-reported quarter, Cabot has an Earnings ESP of -12.87%, while it carries a Zacks Rank #3.

Per Zacks Consensus Estimate, the average crude oil and condensates realization (including hedges) is estimated at $44.88, down 1.8% from the preceding quarter.

Phillips 66 PSX is a leading refining player.  Last quarter, the company reported earnings of $1.09 per share which surpassed the Zacks Consensus Estimate of $1.02. The bottom line also increased from the year-ago quarter’s level of 94 cents.

The Houston, TX-based company’s earnings surprise history is impressive as it delivered an average positive earnings surprise of 433.14% over the last four quarters.

Our proven model shows that Phillip 66 is likely to beat earnings in the quarter under review. This is because the company has a Zacks Rank #3 and an Earnings ESP of +2.43%. (Read more: Is a Beat in Store for Phillips 66 in Q3 Earnings?)

Phillips 66 Price and EPS Surprise

 

Phillips 66 Price and EPS Surprise | Phillips 66 Quote

You can see the complete list of today’s Zacks #1 Rank stocks here.

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Phillips 66 (PSX): Free Stock Analysis Report
 
Chevron Corporation (CVX): Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
 
Cabot Oil & Gas Corporation (COG): Free Stock Analysis Report
 
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