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What's in Store for Noble Energy (NBL) in Q1 Earnings?

Noble Energy Inc. NBL will release first-quarter 2016 financial results before the market opens on May 4, 2016. In the prior quarter, this independent energy company reported a positive surprise of 1,200.0%. Let’s see how things are shaping up at the company prior to this announcement.

Factors to Consider

Depressed commodity prices are a serious concern for the players in the oil & natural gas space. To cope with low prices, Noble Energy is aggressively cutting down capital expenditures and focusing only on areas that hold long-term prospects.

Noble Energy expects the workover in its Isabela assets to impact results in the first quarter of 2016. Despite lowering its capital expenditure by nearly 50% from 2015 levels, Noble Energy expects total production in 2016 to go up by 10%.

Surprise History

The above chart indicates that Noble Energy was able to deliver positive earnings surprises in two of the last four quarters. The average positive surprise was 373.33%.

Earnings Whispers

Our proven model does not conclusively show that Noble Energy is likely to beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here.

Zacks ESP: This is because the Most Accurate estimate is a loss of 56 cents and the Zacks Consensus Estimate is pegged at  a loss of 53 cents, resulting in -5.66% ESP.

Zacks Rank: Though Noble Energy’s Zacks Rank #3 increases the predictive power of the ESP, its -5.66% ESP makes a beat unlikely this quarter.

We caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Stocks in the U.S. oil and natural gas exploration and production space worth considering on the basis of our model are as follows:

Rice Energy Inc. RICE has an earnings ESP of +11.11% and a Zacks Rank #2. It is expected to report earnings on May 4, 2016.

Murphy Oil Corp. MUR has an earnings ESP of +24.14% and a Zacks Rank #3. It is expected to report earnings after the market closes on May 4, 2016.

Chesapeake Energy Corp. CHK has an earnings ESP of +9.09% and a Zacks Rank #3. It is expected to report earnings before the market opens on May 5, 2016.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
 
NOBLE ENERGY (NBL): Free Stock Analysis Report
 
MURPHY OIL (MUR): Free Stock Analysis Report
 
RICE ENERGY INC (RICE): Free Stock Analysis Report
 
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