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Hess (HES) Gears Up for Q4 Earnings: What's in the Cards?

Zacks Equity Research

Hess Corporation HES is set to release fourth-quarter 2019 results on Jan 29.

The oil & gas explorer has a trailing four-quarter positive earnings surprise of 43.5%, on average. The company’s earnings beat the Zacks Consensus Estimate in three of the last four quarter. This is depicted in the graph below:

Hess Corporation Price and EPS Surprise

 

Hess Corporation Price and EPS Surprise
Hess Corporation Price and EPS Surprise

Hess Corporation price-eps-surprise | Hess Corporation Quote

 

In the last reported quarter, Hess’ loss per share of 32 cents came in line with the Zacks Consensus Estimate. The quarterly results were favored by higher hydrocarbon production, backed by the prolific Bakken play. It was partially offset by lower commodity price realization and higher operating expenses. Let’s see how things are shaping up for this announcement.

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Trend in Estimate Revision

Let’s take a look at estimate revisions to get a clear picture of what analysts expect from the company’s upcoming earnings release.

The Zacks Consensus Estimate of a loss of 43 cents for the fourth quarter has seen no upward and five downward revisions by firms in the past 30 days. Considering the downward revision by all the firms, Hess’ bottom line is expected to decline 38.7% on a year-over-year basis.

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.6 billion, suggesting a decline of 6.6% from the year-ago quarter’s reported figure.

Quarterly Estimates

The Zacks Consensus Estimate for fourth-quarter total oil production in the United States is pegged at 146 thousand barrels per day (MBbl/d), which calls for a rise from the year-ago quarter’s reported figure of 132 MBbl/d.

However, the Zacks Consensus Estimate for U.S. average crude oil prices (excluding hedging) is $53 per barrel, which indicates a decline from $57 reported in the year-ago quarter.

Although an increase in total U.S. production is expected to boost the explorer’s results in the fourth quarter, declining average selling prices of crude oil in the domestic market might partially dampen growth.

What Our Model Unveils

Our proven model does not conclusively show an earnings beat for Hess this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here as elaborated below. 

Earnings ESP: Earnings ESP represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate. Hess has an Earnings ESP of -4.59% as the Most Accurate Estimate of a loss of 45 cents per share is wider than the Zacks Consensus Estimate of a loss of 43 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Hess currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Energy Stocks With Favorable Combination

Here are few companies from the energy space which, according to our model, have the right combination of elements to post an earnings beat in the upcoming quarterly reports.

ConocoPhillips COP has an Earnings ESP of +2.45% and a Zacks Rank of 2. The firm is expected to release earnings on Feb 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Antero Resources Corporation AR has an Earnings ESP of +52.44% and carries a Zacks #3. The company is scheduled to release earnings on Feb 12.

NuStar Energy L.P. NS has an Earnings ESP of +1.32% and a Zacks Rank #1. The company is set to release earnings on Feb 5.

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NuStar Energy L.P. (NS) : Free Stock Analysis Report
 
Antero Resources Corporation (AR) : Free Stock Analysis Report
 
Hess Corporation (HES) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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