ConocoPhillips (COP): What's In Store This Earnings Season?

ConocoPhillips (NYSE:COP) , an upstream energy firm, will release second-quarter 2016 financial results on Jul 28, before the opening bell.

Last quarter, ConocoPhillips posted a positive earnings surprise of 11.21%. Let’s see how things are shaping up prior to the announcement.

Factors to Consider this Quarter

ConocoPhillips expects second-quarter 2016 production from continuing operation of 1,500−1,540 million barrels of oil equivalent per day. Although production will likely increase sequentially, the pricing environment for crude, in contrast to the previous few quarters, advanced more than 26% sequentially during the April–June period. West Texas Intermediate (WTI) crude futures during the second quarter hovered mostly between $40 and $50 per barrel.

However, although data point to a recovery, the numbers may not yet be rosy for upstream energy players that include oil and gas exploration and production companies, and drilling and oilfield services players. This is because oil price is still hovering well below $50, which is far below the breakeven price for many energy companies.

Overall activities of ConocoPhillips were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the second quarter deteriorated to a loss of 61 cents from a loss of 54 cents per share over the last seven days.

Earnings Whispers?

Our proven model does not conclusively show that ConocoPhillips is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here, as you will see below.

Zacks ESP: ConocoPhillips currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 61 cents per share.

Zacks Rank: ConocoPhillips carries a Zacks Rank #2 (Buy). Though this increases the predictive power, a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks in the energy sector that have both a positive Earnings ESP and a favorable Zacks Rank include:

SunCoke Energy Inc. (NYSE:SXC) has an Earnings ESP of +400.00% and a Zacks Rank #1. The company is expected to release earnings results on Jul 28.

Chesapeake Energy Corporation (NYSE:CHK) has an Earnings ESP of +12.50% and a Zacks Rank #2. The company is anticipated to release earnings results on Aug 4.

Spectra Energy Corp. (NYSE:SE) has an Earnings ESP of +40.00% and a Zacks Rank #1. The company is likely to release earnings on Aug 3.