Can ConocoPhillips (COP) Spring A Surprise In Q1 Earnings?

Upstream energy firm ConocoPhillips (NYSE:COP) will release first-quarter 2017 financial results on May 2, before the opening bell.

Last quarter, ConocoPhillips posted a positive earnings surprise of 31.58%. The company beat estimates in three of the four trailing quarters with an average positive earnings surprise of 4.93%. Let’s see how things are shaping up for this announcement.

ConocoPhillips Price and EPS Surprise

ConocoPhillips Price and EPS Surprise | ConocoPhillips Quote

What is Driving the Better-than-Expected Earnings?

Following the OPEC deal to curb oil production last November, the commodity recovered significantly from historical low it slipped to during mid-Feb 2016. As an upstream energy firm, ConocoPhillips will be able to earn more cash flows after selling crude at higher prices. Moreover, ConocoPhillips’ share price chart shows significant strength. The stock has gained 7.5% over the last six months compared with the 3.6% decrease registered by the Zacks categorized Oil & Gas – U.S. Exploration & Production industry.

Also, ConocoPhillips announced its decision to divest a huge portion of its Canadian properties to Cenovus Energy. The transaction value is estimated to be around $13.3 billion. As part of the accord, the company would divest its 50% non-operated stake in the Foster Creek Christina Lake oil sands partnership as well as the majority of its western Canada Deep Basin gas properties. The company’s strategy to divest assets that do not fit strategically in its portfolio will help in enhancing liquidity and efficiency of operations. This in turn will boost shareholders return.

Earnings Whispers

Our proven model does not conclusively show that ConocoPhillips is likely to beat on earnings this time because it does not have the right combination of the two key ingredients.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 1 cent. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: ConocoPhillips carries a Zacks Rank #3 (Hold). Note that stocks with Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) have a significantly higher chance of beating earnings estimates. However, ConocoPhillips’ Earnings ESP of 0.00% makes surprise prediction difficult.

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

Stocks to Consider

Here are some firms that have the right combination of elements to post an earnings beat this quarter:

Tallgrass Energy GP, LP (NYSE:TEGP) is expected to release earnings on May 3. The partnership has an Earnings ESP of +5.56% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chesapeake Energy Corp. (NYSE:CHK) has an Earnings ESP of +5.26% and a Zacks Rank #3. The company is expected to release earnings on May 4.

Cimarex Energy Co. (NYSE:XEC) has an Earnings ESP of +2.38% and a Zacks Rank #3. The partnership is expected to release earnings on May 8.

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