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Why Did Concho Resources Stock Rise despite a 4Q15 Earnings Miss?

How Did Concho Resources React to Its Earnings Miss?

(Continued from Prior Part)

Concho Resources’ stock performance

Following Concho Resources’ (CXO) 4Q15 earnings release, its stock rose ~0.7%. CXO’s stock has fallen ~21% year-over-year. In the following graph, we analyze CXO’s stock performance with respect to movements in the broader industry and the broader market.

In the period under discussion—February 10–February 24—CXO overperformed the broader energy industry, the Energy Select Sector SPDR ETF (XLE). XLE has fallen ~29% year-over-year. CXO has also overperformed the broader market, the SPDR S&P 500 ETF (SPY). SPY has fallen ~7% year-over-year.

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In the above graph, you can see that CXO’s performance has been driven mainly by WTI (West Texas Intermediate) crude oil prices. Along with natural gas prices, WTI has been the major driver of the XLE ETF.

After CXO’s 4Q15 earnings release on February 24, its stock closed 0.7% higher despite reporting an earnings miss. Crude oil prices had closed 1% higher the same day. These numbers show that markets’ reaction to CXO’s earnings release wasn’t necessarily positive. CXO’s stock price mirrored movements in crude oil prices, as did several other equity stocks.

Upstream peers Devon Energy (DVN), Apache (APA), and Diamondback Petroleum’s (FANG) stock prices rose 2.6%, ~2%, and ~2.5% respectively, on Wednesday, February 24. APA and DVN make up 3% of the Energy Select Sector SPDR ETF (XLE). Concho Resources makes up ~1% of the Vanguard Energy ETF (VDE).

Read Part 1 of this series to learn more about CXO’s 4Q15 and fiscal 2015 performance.

In the next part, we’ll take a look at analysts’ recommendations for the stock.

Continue to Next Part

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