Is A Beat In Store For Cimarex Energy (XEC) In Q1 Earnings?

Independent oil & gas exploration and production (E&P) firm Cimarex Energy Company (NYSE:XEC) is scheduled to release first-quarter 2017 results, after the closing bell on May 8.

Last quarter, the company delivered a positive average surprise of 1.69%. Moreover, it outpaced the Zacks Consensus Estimate in three of the last four quarters, with an average positive earnings surprise of 151.81%.

Let’s see how things are shaping up for this announcement.

Cimarex Energy Co Price and EPS Surprise

Cimarex Energy Co Price and EPS Surprise | Cimarex Energy Co Quote

Why a Likely Positive Surprise?

Our proven model shows that Cimarex Energy is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +1.18%. This is because the Most Accurate estimate stands at 86 cents, while the Zacks Consensus Estimate is pegged at 85 cents. This is very meaningful and a leading indicator of a likely positive earnings surprise for shares. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Cimarex Energy carries a Zacks Rank #3 (Hold), which combined with a positive Earnings ESP makes us confident about an earnings beat.

Note that stocks with Zacks Ranks #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating on earnings.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

What is Driving the Better-Than-Expected Earnings?

Cimarex Energy estimates 2017 production in the range of 1.06–1.11 Bcfe per day, up 13% from the midpoint of the 2016 level. Higher production is undoubtedly encouraging, especially due to the commodity price improvement in the last one year. This will be reflected in its upcoming quarter results.

Cimarex Energy’s substantial acreage in core operating areas gives it a detailed inventory of exploration and development (E&D) prospects that provide it with relatively low-risk volume growth opportunities. We expect continued focus on drilling activities to remain the primary driver of production growth, going forward. Cimarex Energy is also increasing its ownership interests in the wells where it participates. As a result, successful projects are driving the company’s volumes and reserves and are likely to positively impact the first-quarter results.

Cimarex Energy’s shares have outperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry, year to date. During the aforesaid period, the stock lost 13% as against 17.9% decline for the broader industry.

Other Stocks to Consider

Cimarex Energy is not the only company looking up this earnings season. Here are some companies from the energy space which according to our model have the right combination of elements to post an earnings beat this quarter:

Global Partners, LP (NYSE:GLP) is expected to release earnings on May 9. The partnership has an Earnings ESP of +233.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Contura Energy, Inc. (NS:CNTE) has an Earnings ESP of +3.94% and a Zacks Rank #1. The company is expected to release earnings on Jun 30.

Oceaneering International, Inc. (NYSE:OII) has an Earnings ESP of +33.33% and a Zacks Rank #3. The partnership is expected to release earnings on Jul 20.

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