It has been about a month since the last earnings report for National Fuel Gas (NFG). Shares have lost about 12.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is National Fuel Gas due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
National Fuel Gas Q1 Earnings Beat, Revenues Lag
National Fuel Gas Company posted first-quarter fiscal 2020 operating earnings of $1.01 per share, beating the Zacks Consensus Estimate of 95 cents by 6.3%. However, earnings declined from the year-ago figure of $1.12 per share by 9.8%.
Total Revenues
Total revenues of $444 million missed the Zacks Consensus Estimate of $522 million by 14.9%. The top line also decreased from the prior-year figure of $490 million by 9.4%.
Highlights of the Release
Total operating costs in the reported quarter decreased 9.9% from the year-ago level to $296.2 million, owing to decline in purchase gas prices.
Total production in the reported quarter was 58.4 billion cubic feet, up 19% from the year-ago period. The uptick was led by higher production from the Appalachia region.
Operating income in the reported quarter declined nearly 8.4% year over year to $148.1 million.
The company incurred interest expenses of $25.5 million, which was in line with the year-ago figure.
Financial Highlights
On Dec 31, 2019, National Fuel Gas had cash and cash equivalents of $34.9 million compared with $20.5 million as of Sep 30, 2019.
Long-term debt (excluding current maturities) was $2,134.5 million as of Dec 31 compared with the Sep 30, 2019 level of $2,133.7 million.
The company’s cash flow from operating activities in first-quarter fiscal 2020 was $167.8 million, up from $104.4 million recorded in the year-ago period.
Total capital expenditure in first-quarter fiscal 2020 was $198.5 million, up 11.8% from the year-ago level.
Guidance
National Fuel Gas revised its fiscal 2020 earnings guidance to the range of $2.95-$3.15 from the prior expectation of $3.00-$3.30. The mid-point of the guidance is 10 cents higher than the Zacks Consensus Estimate of $2.95.
The company now expects Exploration and Production capital expenditures in fiscal 2020 in the range of $375-$410 million, reflecting a reduction of $42.5 million from the previous guidance at the midpoint.
National Fuel Gas lowered its fiscal 2020 capital expenditure guidance to the range of $695-$785 million from the earlier guided range of $725-$820 million.
Expectations for fiscal 2020 net production remained unchanged in the range of 235-245 billion cubic feet equivalent.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
Currently, National Fuel Gas has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise National Fuel Gas has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
National Fuel Gas Company (NFG): Free Stock Analysis Report
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