6 Energy Stocks That Crushed Estimates This Earnings Season

The first-quarter reporting cycle is almost over. During a reporting cycle, investors keep a tab of the companies delivering earnings beat.

Earnings theoretically determine the growth or contraction of companies as well as their stocks. Speculations regarding earnings beat or miss can either cheer investors or upset them to the point of a hasty sell-off.

Q1 Earnings Season Wrapping Up

As of May 17, 461 S&P 500 members reported Q1 results that combined account for 95.2% of the index’s total market capitalization. According to the latest Earnings Outlook report, total earnings for these companies increased 24.2% from the same period last year on 8.7% higher revenues, with 77.7% delivering positive earnings surprises and 74.6% beating revenue estimates.

Energy Sector Tops the Charts

True to our expectations, energy sector’s first-quarter 2018 earnings managed to eclipse all the 16 Zacks sectors. With all energy sector components on the S&P 500 index having reported results, total earnings witnessed strong year-over-year growth of 75.7% on 14.2% higher revenues.

While 66.7% of the companies beat earnings estimates, 70% outperformed on the top line.

What’s Behind the Rally?

The first quarter of the year saw the U.S. oil benchmark attain its highest settlement since December 2014, despite record high domestic production. Per EIA data, the commodity rose about 7.5% in the first three months of 2018 to finish the quarter at $64.87 per barrel.

It goes without saying that all oil-related stocks are thus poised to benefit from recovering commodity prices, as the companies will be able to extract more value for their products. Crude was supported by various catalysts, including Middle East tensions, strong demand and continued production curb from OPEC and its allies. Needless to say, such developments reflected strongly on the results.

Screening Parameters

With the help of the Zacks Stock Screener, we have zeroed-in on six energy stocks that have a Zacks Rank #1 (Strong Buy) or 2 (Buy), carry a VGM Score of A or B, and beat earnings estimates by more than 50% in the last reported quarter.

Our proven Zacks Rank is dependent not only on earnings estimates and estimate revisions, but also on actual earnings. Positive surprises strengthen our outlook on a stock and lead to positive estimate revisions. With that said, it is always important to target stocks that are moving higher after strong earnings surprises.

The post-earnings momentum can last several days or weeks, and a strong outlook can be the catalyst for continued momentum over the course of several months. Further, a solid VGM Score highlights the determining elements in a stock that can its price even higher.

The Winners

Here, we have highlighted six energy stocks that crushed earnings estimates in the quarter.

Select Energy Services Inc (NYSE:WTTR): Headquartered in Texas, Select Energy is a provider of water solutions to the U.S. unconventional oil and gas industry. On May 10, the company announced first-quarter 2018 results, posting earnings per share of 15 cents and thereby crushing the consensus estimates by 150%.

The company’s robust results were driven by synergistic benefits from its merger with Rockwater Energy Solutions. This Zacks Rank #1 company with a VGM Score of A surpassed earnings estimates in three out of four trailing quarters with an average beat of 189.58%.

Par Pacific Holdings Inc (NYSE:PARR): Based on Houston, Par Pacific’s operating segments mainly comprise refining, retail and logistics. The company announced its first-quarter results on May 8, posting a massive positive earnings surprise of 350% on strong performance of its Wyoming Refinery and higher margins from the retail segment.

Notably, this is the sixth consecutive positive earnings surprise achieved by the company. The company currently carries a Zacks Rank #1 and has VGM Score of B.

Comstock Resources Inc (NYSE:CRK): Headquartered in Frisco, TX, Comstock is an exploration firm with focus on oil and gas resources that are spread across Texas and Louisiana. The Zacks Rank #2 company, which carries a VGM Score of B, reported first-quarter results on May 10, delivering a positive earnings surprise of 66.18%.

The company delivered better-than-expected results on stronger natural gas production and higher realized oil prices. Notably, the company has an impressive earnings history. It surpassed estimates in each of the four quarters, with an average positive earnings surprise of 48.32%.

Eclipse Resources Corp (NYSE:ECR): Based in Pennsylvania, Eclipse Resources is an independent oil and gas explorer, with its properties primarily concentrated in Appalachian Basin. The company reported first-quarter results on May 2, adjusted earnings surpassed the Zacks Consensus Estimate by a whopping 400% on the back of high production volumes.

The company delivered three consecutive positive earnings surprises. The company currently holds a Zacks Rank #2 and has a VGM Score of B.

HollyFrontier Corp (NYSE:HFC): Dallas, TX-based HollyFrontier is an independent refiner and marketer of petroleum products in the United States. HollyFrontier reported its latest quarterly results on May 2, posting adjusted earnings of 77 cents per share and crushing the Zacks Consensus Estimate by more than 108.11%.

The better-than-anticipated results can be attributed to higher-than-expected refining margins and refined product sales. The Zacks Ranked #2 company has a VGM Score of A. It has a decent earnings surprise history, having surpassed estimates in three out of the four trailing quarters, with an average beat of 41.26%.

Cheniere Energy, Inc. (NYSEAMERICAN:LNG): Houston, TX-based Cheniere Energy is primarily engaged in businesses related to liquefied natural gas through its two business segments: LNG terminal; and LNG and natural gas marketing. The company is the only LNG exporter in the United States and plans to turn the natural gas glut into export revolution. It currently exports to more than 20 countries.

The company unveiled its latest quarterly results on May 4, posting earnings of $1.18 per share, which beat the consensus estimates by 90.32% on robust production volumes and strong pricing. Cheniere Energy raised its EBITDA guidance for full-year 2018, following the better-than-expected profit. The company has now delivered two consecutive positive earnings surprises. It has a Zacks Rank #2 and a VGM Score of A.

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