Vanguard Natural (VNR) Q3 Earnings: What's In The Cards?

Upstream energy partnership Vanguard Natural Resources LLC (NASDAQ:VNR) is set to release third-quarter 2016 results, after the closing bell, on Nov 8.

In the preceding three-month period, this Houston, TX-based oil and gas finder reported a massive positive earnings surprise of 60.00%. Coming to the earnings surprise history, Vanguard Natural Resources beat estimates in three out of the last four quarters.

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

Factors to Consider This Quarter

Vanguard Natural Resources is a firm in the oil and gas exploration and production industry. This makes its earnings vulnerable to commodity price fluctuations. Although oil prices improved from the mid-February lows, the pricing scenario was weaker than the year-ago comparable quarter. The picture was same for natural gas.

However, the firm has hedged the majority of its production during the July–December period at promising prices. To be precise, it has hedged 94% of oil at $65.81 per barrel and 86% of gas at $4.27 per MMBtu. This should cushion the partnership from the current volatile pricing environment.

VANGUARD NATURL Price and EPS Surprise

Also, Vanguard Natural Resources has worked hard to improve well economics through meaningful reductions in well cost and better rate of return. This should also boost the upcoming results.
Earnings Whispers

Our proven model does not conclusively show that Vanguard Natural Resources will beat estimates this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. That is not the case here as you will see below.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -9.52%. This is because the Most Accurate estimate stands at 19 cents, while the Zacks Consensus Estimate is pegged higher at 21 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank:Vanguard Natural Resources carries a Zacks Rank #3. Though this increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.

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

Stocks to Consider

While an earnings beat looks uncertain for Vanguard Natural Resources, here are some domestic upstream you may want to consider on the basis of our model, which shows that they have the right combination of elements to post earnings beat this quarter:

Tesco (LON:TSCO) Corporation (NASDAQ:TESO) is expected to release third-quarter earnings results on Nov 4. The partnership has an Earnings ESP of +5.41% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

CSI Compressco LP (NASDAQ:CCLP) has an Earnings ESP of +25.00% and a Zacks Rank #3. The partnership is anticipated to release third-quarter earnings on Nov 4.

Lonestar Resources US Inc. (NASDAQ:LONE) has an Earnings ESP of +16.67% and a Zacks Rank #2. The partnership is likely to release third-quarter earnings on Nov 8.

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